The Wall Street Journal has reported that the SEC is investigating whether stablecoin issuance violated investor protection laws, marking the latest hit to an industry that has been rattled by layoffs and bankruptcies. Stablecoins are digital tokens that are pegged to the value of an asset, such as the US dollar. The SEC’s investigation is focused on whether the issuers of stablecoins have properly disclosed the risks associated with investing in them.
During the interview with CNBC, Jeremy Allaire, CEO of Circle, a global financial technology firm that offers a range of blockchain-based services noted that, we delved into the broader cryptocurrency market and what the future holds for it.
Allaire noted that Bitcoin’s extreme volatility, which saw its price rise from $16,000 to $65,000 before falling back to $16,000 within six months, made it difficult to consider it a reliable currency. He explained that people are unlikely to use Bitcoin to purchase goods or services when they risk losing substantial amounts of money in the short term. However, Allaire believes that as regulatory clarity increases, so too will the stability of cryptocurrencies.
The SEC’s investigation into stablecoins has caused concern for some investors, but Allaire believes that it is a necessary step towards establishing a more secure and trustworthy cryptocurrency market. He argued that regulation is key to bringing institutional investors into the market, which would create more liquidity and reduce volatility.
When asked whether the recent surge in cryptocurrency prices represents a “crypto spring” after the “crypto winter” of the past few years, Allaire remained cautious. While he acknowledged that the regulatory environment has improved, he stressed that cryptocurrencies still face significant challenges in terms of adoption and infrastructure. In his view, the cryptocurrency market is still in its early stages, and it will take time for it to reach maturity.
Allaire points to Bitcoin and Ethereum as two platforms that are here to stay. “Bitcoin is sort of here to stay,” they note. “Ethereum as a platform people are building on, it’s here to stay, you’ve seen that.”
Interview
Allaire also highlights the performance of USDC, a stablecoin pegged to the US dollar. “Notably, we also saw, you know, all of last year during the carnage while you know, all of these digital assets were down so much USDC actually grew, it was one of the only assets that grew in 2022,” they explain.
The interviewer pointed out that “SEC Chair Gary Gensler took a tough stance on regulation a few weeks ago, the market’s response was to resist or accept the notion that the industry would finally be sorted out.”
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