The SVB collapse that briefly caused USDC to de-peg from the dollar has only shaken confidence in the banking system, says Circle’s CEO.
Jeremy Allaire, CEO of stablecoin giant Circle, spoke at Consensus 2022 on Wednesday about where companies like his fit into the current US dollar system and regulatory regime.
The executive stated believes a widespread loss of faith in United States Banking is contributing to a “de-dollarization”, and that digital dollar stablecoins will help it retain its global dominance.
A Safe Digital Dollar
During a panel titled “ A 10-Year Rollercoaster Toward a New Model of Money,” Allaire said that the collapse of Silicon Valley Bank (SVB) in March was a mere reminder of why Circle and other crypto firms were founded 10 years ago.
“It was a reaction to the global financial crisis of 2008,” he said. “ I personally spent a huge amount of time trying to understand the nature of money, how the banking system [works], the international monetary system – and that was before I had any sort of knowledge of Bitcoin or any of this,” he said.
Bitcoin’s whitepaper was published in 2008 as numerous massive bank failures in the United States left taxpayers footing the bill for risky decisions investment banks made with customer money. The network was the first of its kind to allow for trustless peer-to-peer payments in a digital manner, from which many more cryptocurrencies have followed.
Allaire noted that the idea of “sound money” permeates the crypto space a great deal, and that Circle’s idea was to introduce that to the world of fiat currency, in digital form. “That would dramatically change both the underlying safety of money, and open up extraordinary new opportunities for how you can arrange economic activity and financial activity.”
De Dollarization
The CEO said that there is a “very active de-dollarization taking place,” in response to the various banking failures in March, which exposed the US banking system’s underlying risks. Even federal regulators have recognized this in various government documents on stablecoins – including the President Working Group’s report – advocate that such assets be backed by cash and US treasuries, rather than commercial bank deposits.
BitMEX co-founder Arthur Hayes published an essay this month arguing that global “de-dollarization” may be a reality as various international deals point to nation-states seeking less dependence on USD.
A solution to the dollar’s falling dominance, Allaire claims, is stablecoins. “International is actually where the action is for stablecoins, and for USDC specifically,” he said.
When asked about lessons for crypto newbies, Allaire said to be patient when evolving big, systemic, institutional structures. After 10 years, Allaire said Circle has only just completed its “1.0” vision of the company.
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