“Stablecoins issued by private companies have already gained the trust and recognition of users,” a spokesperson for Circle, the issuer of the USDC stablecoin, said in a letter to the U.S. Federal Reserve. In this letter, Circle Internet Financial (CIF) asked the Fed not to issue a digital dollar.
Circle’s Appeal to the Fed
CIF explains that the regulator’s release of a digital dollar could undermine the position of private companies that have already launched their stablecoins pegged to the dollar. Therefore, the Fed should abandon the idea of issuing a digital dollar. In its letter, USDC stablecoin issuer Circle states that their stablecoin is endowed with the properties of a central bank digital currency (CBDC).
“A large number of companies, including Circle, have issued their stablecoins based on blockchain technology. With the help of these stablecoins, they allowed market participants to make transactions worth trillions of US dollars, “the representative of the company adds.
“The issuance of a central bank digital currency by the Fed could negatively impact existing stablecoins and undermine the development of the technologies embedded in them.”
Since the beginning of May, the stablecoin market has suffered losses associated with the collapse of the algorithmic stablecoin from Terra – UST. Unlike the UST, the USDC stablecoin issued by the CIF is backed by cash and short-term liabilities of the U.S. government. USDC is the second largest capitalization stablecoin, Circle regularly Reports on the composition of their reserves.
“The USDC has a supportive effect on the U.S. dollar, and strengthens its position as a global currency,” the CIF letter said.
Also, representatives of the company draw attention to the fact that the release of a digital dollar by the regulator may have a negative impact on the banking sector, as warned by representatives of banks.
Circle also points out that blockchain technologies are developing quite quickly, and the Fed may not keep up with the pace of this development, which will lead to the use of obsolete technologies in its digital dollar.
A representative of the company reports that Circle supports the policy of regulating the cryptocurrency market pursued by the US Federal Reserve System.
Earlier, representatives of the Fed said that the issue of a digital currency of the central bank is impossible without support from Congress and the president.
Author: Elvir, Analyst Freedman Club Crypto News
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