Understanding the Role of Stable Currency in Payments and the Necessity of Legislation: Insights from Circle’s Official Blog

It is reported that, according to Circle’s official blog, the issuer of the USDC stable currency attended the hearing on Understanding the Role of Stable Currency in Payment and the Necessity of Legislation held by the US Congress on April 19. Dante Dispatche, Circle’s chief strategic officer and global policy director, said that the transmission of the USDC stable currency is in the form of electronic cash denominated in US dollars, which can simultaneously improve the economic competitiveness and national security interests of the United States. Over time, as long as the regulatory framework in the United States is in place, a form of digital dollar will emerge, which has legal certainty, the transferability of internet scale, basic protection (including equal redemption rights for issuers in bankruptcy, privacy), the rule of law, and other key features. The only way to achieve this goal is for the United States Congress to enact comprehensive payment stability currency legislation.

Circle: USDC can enhance US economic competitiveness and national security interests

In recent years, stable coins have emerged as an alternative to traditional cryptocurrencies, given their ability to maintain stability in value. Stable coins are digital tokens designed to maintain a stable value by pegging to a stable asset such as the US dollar or gold. Among the most popular stable coins is the USDC, an ERC-20 token created by Circle and Coinbase.
# Table of Contents
1. What is the USDC?
2. USDC’s Journey to Congress
3. Role of Stable Currency in Payment
4. The Need for Legislation
5. Benefits of Regulation and Legal Certainty
6. USDC and National Security Interests
7. Challenges of Stable Currency Regulation
8. The Future of Digital Dollar
9. Conclusion
10. FAQs

1. What is the USDC?

The USDC is a stable coin designed to maintain a one-to-one exchange rate with the US Dollar. This coin’s value is backed by a reserve of US dollars held in Circle’s bank account, making it different from cryptocurrencies like Bitcoin or Ethereum.

2. USDC’s Journey to Congress

Recently, Dante Dispatche, chief strategic officer, and global policy director of Circle, testified to Congress on the role of stable currencies in payment and the necessity of legislation. Dispatche argued that stable coins like the USDC will continue to gain prominence in the financial sector, given their stability compared to cryptocurrencies.

3. Role of Stable Currency in Payment

The use of stable coins has increased exponentially, especially in peer-to-peer transactions, where they offer an alternative to fiat currencies. Also, businesses can use stable coins to facilitate easy global payments, benefiting from faster and cheaper cross-border transactions.

4. The Need for Legislation

The unregulated nature of stable currency creates a lack of clarity on its legal status and compliance requirements. Hence, there’s a need for legislation to provide regulatory clarity, investor protection, and maintain the stability of the financial system.

5. Benefits of Regulation and Legal Certainty

The enactment of comprehensive payment stability currency legislation will aid in protecting market participants, promoting innovation, fostering sound stablecoin markets while preventing fraudulent and manipulative acts. Legal certainty gives issuers, investors, and consumers confidence in the stability, legality, and regulatory compliance of the currency or asset.

6. USDC and National Security Interests

According to Dispatche, the USDC’s transmission in the form of electronic cash denominated in USD enhances national security interests as the US dollar serves as the main currency for international trade, oil sales, and others.

7. Challenges of Stable Currency Regulation

Enacting payment stability currency legislation is not without challenges or regulatory complexities. Accordingly, regulators, lawmakers, and market stakeholders must collaborate to draft proper regulations while promoting innovation and financial stability.

8. The Future of Digital Dollar

With proper regulations, the USDC and other stable currencies can facilitate the emergence of a digital dollar that solves the challenges associated with dollars in circulation, sets standards for digital currencies, and ensures compliance with existing laws and regulations.

9. Conclusion

Stablecoins offer exciting potential benefits with regard to stability, cost reduction in cross-border payments, and reducing the volatility of cryptocurrencies. However, these benefits must be accompanied by regulatory protections to prevent market manipulations, promote investor confidence, and protect national security interests.

10. FAQs

1. Is the USDC backed by any digital asset or traditional currency?
No, the USDC is backed by a reserve of US dollars held in Circle’s bank account.
2. Can the value of the USDC change?
While the value of the USDC is more stable than traditional cryptocurrencies like Bitcoin, the value may fluctuate based on market conditions.
3. What regulatory changes can encourage the growth of the stable coin market?
The enactment of comprehensive payment stability currency legislation will aid in protecting market participants, promoting innovation, fostering sound stablecoin markets while preventing fraudulent and manipulative acts.