Jeremy Allaire’s Circle issued a U.S. dollar-backed stablecoin before stablecoins were cool. Now that Facebook has joined the fray with its Libra coin, which is designed to be backed by a basket of fiat currencies (and maybe other financial instruments), the spotlight on stablecoins has grown brighter. But Allaire, who is testifying in front of the U.S. Senate on July 30, wants lawmakers to understand the stark differences between USD Coin and Libra.
Allaire isn’t alone, as Ripple CEO Brad Garlinghouse recently urged Congress not to “paint all digital currencies with one broad brush.” Blockchain companies are increasingly distancing themselves from Facebook’s Libra coin. Even though Libra is said to have been good for bitcoin for the amount of attention it brought to crypto, it has become taboo from a regulatory perspective.
Allaire describes stablecoins as “critical building blocks for the future digital economy.” But as he points out, not all stablecoins are the same “flavor.” For instance, while USD Coin is backed 1:1 by a single fiat currency (the U.S. dollar), Libra is backed by multiple currencies. Allaire describes how Circle’s stablecoin has more use cases than Libra.
“While USDC was initially launched with a focus on trading and markets use-cases, similar to Libra, it has been designed to expand into payments and settlement for both consumers and businesses. Because it is built on the most popular smart contract platform, Ethereum, we also expect USDC to be used for financial contracts and other tokenized digital assets.”
Additionally, Libra is limited to its native blockchain while Circle’s CENTRE, which is the platform on which USD Coin is issued, “is becoming blockchain agnostic,” according to Allaire.
Of course, the most obvious difference between USD Coin and Libra is that Circle’s stablecoin launched at year-end 2018 while Facebook’s coin remains a glimmer in Mark Zuckerberg’s eye. Allaire states:
“Over $1 billion has been tokenized, and over $500 million redeemed, through our services. US Dollar Coin is now the largest and fastest-growing financially transparent stablecoin issued by regulated financial institutions.”
Allaire’s upcoming testimony before the Committee on Banking, Housing, and Urban Affairs could be particularly impactful considering the Circle CEO has already moved some of his business away from the U.S. and into Bermuda. He made the decision amid Bermuda’s crypto-friendly approach to regulation. Lawmakers will see before their eyes the fallout from their hesitation to nurture tech innovation in the U.S.
“Without a sound, pragmatic, and agile national policy framework for digital assets, I am concerned that the United States will not be the world’s leader in this critical new technology, that it will continue to fall behind, and that it will not fully reap the benefits of the economic transformation that digital assets will bring,” says Allaire.
Allaire has also been quick to criticize India for its pursuit to place a blanket ban on cryptocurrencies.
The U.S. hasn’t taken as much of a hardline on crypto as India, but it hasn’t made it easy, either.