Cryptocurrencies: Regulation is Necessary, Says Circle CEO



Like any technological innovation, the cryptocurrency sector must be regulated, says Jeremy Allaire, co-founder of the American company Circle, which created one of the most popular cryptocurrencies in the world, during an interview with AFP.

"We need to align technology with social objectives," says the CEO, who was in Paris, the headquarters of Circle in Europe, at the beginning of the week.

Within the cryptocurrency family, Circle offers a slightly unique product, "stablecoins": USDC, a so-called stable cryptocurrency because it is pegged to the U.S. dollar. Currently, about $35.5 billion in USDC is in circulation.


Circle has also created EURC, this time pegged to the euro.

Like other cryptocurrencies, transactions are recorded on a decentralized ledger, the blockchain, rather than through a bank as with traditional currencies. However, while cryptocurrencies like Bitcoin experience significant price fluctuations, stablecoin creators aim for price stability.

Stablecoins are mainly used by investors to facilitate the exchange of cryptocurrencies between each other without going through a bank. They also provide users with access to a dollar-pegged product without having a U.S. bank account, enabling cross-border payments and money transfers.

Because of these uses, especially in a world driven by technological advances, it is important to establish safeguards, comments the CEO.

"If I create software to control a ballistic missile system, that should be a regulated activity... Crypto is the same thing," says Jeremy Allaire.


- Fraud 

Is this wishful thinking? Cryptocurrencies have made headlines since their creation, from extreme volatility to the collapse of several major companies, most notably the bankruptcy of the FTX exchange platform.

Not to mention their potential fraudulent use. Bitcoin remains the currency of choice for paying on the darknet without leaving a trace, and for extorting funds through ransomware attacks, which block access to a victim's computer system and demand ransom payments.

According to a recent report from the analysis firm Chainalysis, the first half of 2024 saw a decrease in illicit activities. However, during this period, $460 million was paid in ransomware, a figure that increased by 2% year-on-year.

"The technology is entirely open source. The entire transaction infrastructure is public, visible, and verifiable in real time," defends Circle's CEO. "Now, some use this technology outside of any supervision or have started creating risky products. So yes, there is fraud and abuse," he acknowledges.

"But that’s not an argument against the technology. It’s an argument against humans. And it’s an argument in favor of better oversight."

The issue is being taken seriously by authorities around the world. In 2023, the European Parliament adopted a regulation on cryptocurrency markets (MiCA, for Markets in Crypto-Assets), which notably requires mandatory licensing for service providers around digital assets. In July, Circle announced that it was the first stablecoin issuer to comply with this new regulation.

In the United States, consistent regulation is struggling to take shape, but the issue is on the agenda.

"We will encourage innovative technologies like artificial intelligence and digital assets while protecting our consumers and investors," Democratic presidential candidate Kamala Harris promised a few days ago, according to Bloomberg.

In May, the U.S. House of Representatives passed a legal framework intended to regulate the cryptocurrency market, the "21st Century Financial Innovation and Technology Act."

Meanwhile, Circle is preparing for its listing on the New York Stock Exchange, where it will relocate its headquarters, currently in Boston.

"We chose New York, at the very top of the World Trade Center, right at the heart of the international dollar system. It's partly symbolic... We hope to build the first digital dollar in the world and transition to this new internet-based financial system," says Jeremy Allaire.


Source:AFP

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