Caroline Hill, director of global policy and regulatory strategy at stablecoin issuer Circle, has partly blamed the recent failures of cryptocurrency-linked banks on traditional financial institutions and not digital assets.
Speaking at a South by Southwest (SXSW) panel on cryptocurrency regulation in Austin, Texas on March 13, Hill alluded to some of the concerns surrounding the loss of USD Coin token parity ( USDC) issued by Circle, amid news that the company had more than $3 billion in reserves at Silicon Valley Bank. The stablecoin price fell roughly 10% on March 10 before dipping back to $1 on March 13.
“What has happened in the last few days has been an ironic black swan situation where the contagion has not been from cryptocurrency to traditional finance, but from traditional finance to cryptocurrency,” Hill says. “It’s another reason why I think regulation is necessary, moving stablecoin issuers closer to central banks is the right way to go, because ultimately we are a totally secretive model that relies on a fractional banking industry.”
US lawmakers, including Sens. Kirsten Gillibrand and Cynthia Lummis, proposed a cryptocurrency bill in 2022 that would make stablecoins overseen by the Office of the Comptroller of the Currency. Although it never passed Congress, senators announced some updated drafts of the legislation following events in the cryptocurrency market crash, including the collapse of Terra and FTX.
Hill commented on how recent events around Silicon Valley Bank, Silvergate Bank and Signature Bank could affect this legislation in the future:
“I will hold that [la legislación federal de punto de vista] It continues to drive attention to the issue, and I think it again brings even more importance to the consideration of who would be the regulator of stablecoin issuers, what access would they have that traditional financial institutions have – for example, the Federal Reserve.”
Scott Bauguess, Coinbase’s vice president of global regulatory policy, said the European Union Markets for Crypto Assets framework, or MiCA, had given the United States a “really good baseline” for regulation, calling it a “very good approach.” sensible” for cryptocurrencies after the collapse of a major exchange such as FTX. Although MyCA still waiting for the final vote Of EU policy makers, many expect the framework to enter into force from 2024.
Senator Lummis was scheduled to speak on the cryptocurrency regulation panel at SXSW. Cointelegraph reached out to her staff, but did not hear back by press time.
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