Russia is considering adding the subject of stablecoins to an upcoming bill, allowing them to be used officially for completing cross-border payments. Alexey Guznov, Deputy Chairman of the Bank of Russia, declared that proposals have already been presented and the issue is now being discussed. The Ministry of Finance also confirmed that this is being […]
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Circle CEO Jeremy Allaire: ‘Other Governments Are Regulating Digital Dollars Before the US’
Jeremy Allaire, CEO of Circle, the company behind the issuance of usd coin (USDC), has expressed his worries about the state of stablecoin regulation in the U.S. In a congressional hearing, Allaire stated that other governments were already regulating the issuance of digital dollars (dollar-backed stablecoins) and called on the U.S. government to act by issuing stablecoin rules.
Circle CEO Jeremy Allaire Calls for Stablecoin Regulation: ‘It’s Time to Act.’
Jeremy Allaire, CEO of Circle, a U.S.-based stablecoin company, has called for stablecoin regulation to preserve the country’s sovereignty over the issuance of digital dollars. In a congressional hearing, Allaire explained that other countries have already drafted and established frameworks for issuing dollar-backed stablecoins, leaving the U.S. behind.
Allaire explained:
We are seeing governments around the world — the EU, the U.K., Japan, Hong Kong, Singapore, and others — actually defining the rules for how dollars, digital dollars, are issued and operate in those markets, which is astounding.
Furthermore, Allaire detailed how the lack of regulation could have “devastating consequences” for the competitiveness of the U.S. dollar in a world driven by digital interactions on the internet. Allaire recently reiterated his call to action on social media, stating: “It’s time to act.”
How Commercial Banking Affected USD Coin
Circle is the company behind usd coin (USDC), the second largest stablecoin in the crypto market, with a market cap of .3 billion. The token suffered a depegging incident in March due to the demise of Silicon Valley Bank (SVB), which held 8.8% — about .3 billion — of the total reserve backing the USDC stablecoin.
The depeg, which took the price of usd coin as low as .85, was reverted with the announcement that all the depositors of SVB would be made whole. At the time, Allaire remarked on the importance of establishing clear rules to avoid this from happening again, advocating for “full-reserve digital currency banking that insulates our base layer of internet money and payment systems from fractional reserve banking risk.”
Stablecoins have risen as a significant part of the cryptocurrency market, with a notable jump in their utilization. According to Kaiko, a cryptocurrency market data provider, the utilization of stablecoins has risen to 76% of all cryptocurrency transactions. This represents a 16% increase since the beginning of 2022.
A new stablecoin legislation draft was released by House Financial Services Committee Chair Patrick McHenry on June 8.
What do you think about Jeremy Allaire’s calls for stablecoin regulation? Tell us in the comments section below.
India Highlights Need for ‘Common Approach to Regulating Crypto Ecosystem’
India’s Finance Ministry has highlighted the necessity for “a common approach to regulating the crypto ecosystem” in its flagship Economic Survey this year. “Crypto assets are self-referential instruments and do not strictly pass the test of being a financial asset because it has no intrinsic cashflows attached to them,” the Indian government stated.
Finance Ministry’s Economic Survey Includes Crypto This Year
Indian Finance Minister Nirmala Sitharaman presented the Economic Survey 2022-23 in Parliament Tuesday. The Economic Survey is an annual flagship document of the Ministry of Finance that outlines the performance of the Indian economy in the previous financial year and presents an economic outlook for the current financial year.
Including cryptocurrency for the first time this year, the Economic Survey highlights the “necessity of a common approach to regulating the crypto ecosystem.”
The 414-page document explains, “The recent collapse of the crypto exchange FTX and the ensuing sell-off in the crypto markets have placed a spotlight on the vulnerabilities in the crypto ecosystem,” elaborating:
Crypto assets are self-referential instruments and do not strictly pass the test of being a financial asset because it has no intrinsic cashflows attached to them.
India’s central bank, the Reserve Bank of India (RBI), has also repeatedly warned that crypto has no intrinsic value, adding that they pose risks to the country’s financial stability. The RBI has recommended banning cryptocurrencies like bitcoin and ether.
The Economic Survey also states that “U.S. regulators have disqualified bitcoin, ether, and various other crypto assets as securities.” However, the chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has confirmed that bitcoin is a commodity but would not comment on ether. Nonetheless, he stressed that most other tokens are securities.
The Ministry of Finance’s Economic Survey then references a joint statement made on Jan. 3 by the U.S. Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) which highlighted the three agencies’ concerns about the risks cryptocurrencies pose to the banking system.
The Survey continues:
The geographically pervasive nature of the crypto ecosystem necessitates a common approach to the regulation of these volatile instruments. In this context, the global response to cryptos is evolving.
The document proceeds to discuss the current regulatory approaches worldwide, including in the European Union, Japan, Switzerland, the U.K., Albania, and Nigeria.
“Monitoring and regulating cryptocurrencies have been tricky, and regulators across the globe find it challenging to keep track of the new and emerging issues in the fast-moving uncharted field,” the Survey adds, noting:
There are minimal global standards applicable to unbacked crypto assets, which do not currently mitigate all risks and vulnerabilities.
The Survey details that standard-setting bodies have been making efforts to adjust and develop standards for regulating crypto. However, they focus on specific issues or sectors. “Thus, there are regulatory gaps at each stage when crypto assets are issued, transferred, exchanged, or stored by non-bank entities,” the document concludes.
India has been trying to develop a crypto policy for several years. A draft crypto bill was published in July 2019 but was not taken up in parliament. The finance minister previously said that the Indian government plans to discuss crypto regulation with the G20 members in order to establish a technology-driven regulatory framework for crypto assets. Last month, the government unveiled its plan to launch a crypto awareness program.
Meanwhile, the RBI is piloting its central bank digital currency (CBDC). A wholesale digital rupee pilot was started in November last year while a retail pilot began in December.
What do you think about the Indian government including cryptocurrency in this year’s Economic Survey and its emphasis on a “common approach to regulating the crypto ecosystem”? Let us know in the comments section below.
Kazakhstan Parliament Adopts Law Regulating Crypto Mining and Exchange
Lawmakers in Nur-Sultan have approved the final version of the law “On Digital Assets in the Republic of Kazakhstan.” The new legislation, including several other bills, regulates the circulation of cryptocurrencies in the country and introduces a licensing regime for crypto miners and exchanges.
Senate Votes on Crypto Law, Sends It to President of Kazakhstan
Kazakhstan’s Senate has adopted a bill designed to regulate cryptocurrencies and related activities in the Central Asian nation. Along with additional legal documents, the new law “On Digital Assets in the Republic of Kazakhstan” creates conditions for establishing a crypto ecosystem in the country, local media reported.
Members of the upper house of parliament considered the comprehensive package earlier in January and decided to propose certain amendments to the Mazhilis, which had already approved its version of the legislation. However, President Kassym-Jomart Tokayev dissolved the lower house on Jan. 19 and called early elections.
Until a new Mazhilis is elected, the Senate has all legislative powers, Senator Bekbolat Orynbekov explained, quoted by the Zakon.kz news portal. The digital assets law and the related acts constitute a single set of laws that will allow Kazakhstan’s head of state to fulfill his regulatory duties regarding the mining of digital currencies and their circulation.
Tokayev is yet to sign the law and the other necessary changes introduced by the senators, including amendments to Kazakhstan’s laws on taxes and other payments to the budget, judicial administration, and administrative offenses.
A key goal for the government is to regulate the activities of companies minting digital currencies in the country. Kazakhstan became a crypto mining hotspot following China’s crackdown on the industry. The influx of miners has been blamed for its growing electricity deficit.
The newly adopted legislation creates a legal framework for the sector and legalizes the market for digital assets by implementing licensing for both miners and crypto exchanges. The authorities also hope it will attract more foreign investments and increase state budget revenues.
The new rules come after on Jan. 1 registered crypto miners started paying a higher surcharge for the electricity they use under a law signed by President Tokayev in July 2022. Alongside its regulatory efforts, Kazakhstan has been going after underground mining farms and illegal trading platforms.
Do you think Kazakhstan will be an attractive destination for crypto businesses after the new legislation enters into force? Share your expectations in the comments section below.
G20 Reg Watchdog Issues Recommendations for Regulating Stablecoins
The post G20 Reg Watchdog Issues Recommendations for Regulating Stablecoins appeared first on DCEBrief.
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