Jeremy Allaire (Circle): "Crypto regulation is more attractive in Europe than in the US"

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This is one of the world's leading economic zones. We are paying close attention to what is happening in Europe, particularly from a legal point of view. The MiCA regulation (which harmonises crypto regulations in Europe) is an important piece of legislation. It's going to take time to come into force, because it covers a lot of subjects, but we're working on it and looking at how we can adapt to it, which is why I'm here in Europe in particular.

You've just launched Euro Coin, how did you manage the creation of this euro-linked cryptocurrency?

Circle has experience in this area. We launched the USDC dollar stablecoin in the United States four years ago. Since then we have built the infrastructure and the ecosystem of partners (companies, banks, editor's note) that have enabled it to become so large today ($55 billion, editor's note), and that's what we want to replicate with Euro Coin, which is currently regulated as an American business.

MiCA plans for euro stablecoins to be "regulated" in Europe. What are you going to do?

We only know the broad outlines of MiCA, so we will wait to find out exactly what the final text provides for stablecoins and their issuers.

What do you say to those who are concerned about the fact that the potential largest euro stablecoin will be driven by an American company?

First of all, we don't consider ourselves to be an American company. Circle is a global company. A large part of our business is in the US, but we also have operations in Asia and Europe, such as Ireland, where we have been based for several years.

The USDC is backed by dollar reserves and Treasury bills (US government bonds). Do you plan to do the same with the euro stablecoin?

We're waiting to see the final version of MiCA, but it's possible that we will. For the moment, the list of assets that will be able to constitute the reserve of a stablecoin in Europe is not yet very clear. What is certain is that this is a very serious option, because it allows the reserve to generate a return and therefore improve the profitability of the project.

Why did you launch the euro stablecoin at the end of June? Was it because MiCA was on at the same time?

No, it's an absolute coincidence.

Nothing to do with the rise in European bond interest rates either, which makes a euro stablecoin more attractive to you?

Idem, coincidence of timing.

At the moment, the Euro Coin reserve is managed by the US bank Silvergate. Are you planning to work with European banks?

We are indeed planning to work with European banks. We are already in discussions with some of them.

French banks?

We are in discussions with several major European banks and France has several major banks...

Are you going to register in France?

We're working on it.

On which platforms is Euro Coin available?

There are already many like FTX, Binance US, Bitstamp, BitPanda, Uniswap, Curve, etc. There are more to come.

Europe is very much at the forefront of regulation. After the RGPD, at the end of June it reached a "political" agreement on MiCA, which is intended to regulate the digital assets sector. What do you think of this regulation? Is it a strong point for Europe?

MiCA is an excellent thing as it creates a global framework for cryptos within one of the world's leading economic zones. One of the main advantages of MiCA is that it allows you to "passport" your licence across 27 countries. This is a considerable time saver for everyone.

Yet many European companies fear the consequences of MiCA...

I think MiCA is to cryptos what the RGPD is to privacy. Remember the early debates around the RGPD, and what it ultimately brought to Europe. We need to take a long-term view. Today, Europeans are very attached to the fact that they have a right to privacy on the Internet. The same thing will happen with cryptos. If MiCA is technically well transposed into the texts, Europe will come out on top.

Just what should US regulation look like in relation to MiCA?

I think that in the United States things will move more slowly, or rather less comprehensively. Things are moving forward, but in small steps.

Is it better to work like this?

No, because in the US there is competition between regulators: not all of them do the same thing, so we have to adapt to regulations that are sometimes very different from one state to another, and I'm not even talking about the federal level. Crypto regulation is more attractive in Europe than in the US.

The last few months have been particularly complicated on the markets, notably with the crash of Terra Luna and its algorithmic stablecoin UST. Do you think that other projects of this kind will emerge?

There will always be people chasing the 'holy grail', the 'perfect' stablecoin, but I think that in the long term the regulators will make it very difficult to launch this type of project. There will be a lot of constraints. The stablecoins that are most likely to develop are those whose reserves are based on fiat currencies such as the dollar or the euro. They will take on a considerable role in the economy. Initially, they will be based 100% on fiat currency reserves, and then things will evolve: we will certainly be able to put various assets in the reserves.

How do you explain the fact that there are virtually only dollar stablecoins?

Until now, the main driver of demand for stablecoins has been financial activity. Stablecoins are primarily used by cryptocurrency investors and traders who think in... US dollars. The dollar is the currency of the markets. As long as demand for stablecoins is driven by investors, dollar stablecoins will dominate. But things are going to change gradually, and that is precisely why we are launching a euro stablecoin. Europeans are going to use stablecoins more and more in their everyday lives. This trend will be seen all over the world: in Asia, Africa, America...

Are you planning to launch stablecoins for the yen, pound sterling and other currencies?

Yes, we are. Stablecoins are a revolution in payments because they allow transactions to be made 24/7 in the four corners of the world. It's much more efficient than the current banking and financial system. Everyone is going to need it.‍

Why did Facebook (now Meta) fail with its Libra project?

It was surely one of the most complicated projects to implement from a commercial, technical and regulatory point of view. And some of the technical choices they made for their digital 'currency' were not the right ones. Opting for a closed blockchain system is very limiting. The future of stablecoins and cryptos lies with open protocols.

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