(Last of a two-part interview)
In the first part of the interview, Jeremy Allaire, chief executive of Goldman Sachs-backed cryptocurrency startup Circle, explained how the newly launched stablecoin USD Coin token can solve the pain-point of the mass adoption of cryptocurrency.
In the second part of the interview, he shares his thoughts on multiple stablecoin projects launched in recent years.
EJ Insight: We have seen multiple stablecoin projects launched in the market, in particular, the controversial Tether (USDT), which has been criticized for its failure to prove that its reserves have enough US dollars to back up the cryptocurrency on a one-to-one ratio, as it has promised. How does Circle’s USD Coin token compare to other fiat-backed stablecoins?
Allaire: CENTRE’s USDC is built on a foundation of openness. USDC is an open source project and is run out of a newly emerging open standards consortium. USDC issuers must be regulated financial institutions, have monthly financial attestations from a certified public accountant, and need to provide real-world banking integration and liquidity, as well as hold USD funds with high-quality, low-risk banking partners.
USDC is not just a fiat token issued by one company, but is an open standard that many companies can implement and issue. If we end up with each crypto exchange or fintech company issuing their own stablecoin, that’s like going back to the 1800s when banks issued their own commercial notes. An open standard for fiat payments on the internet is critical, and that’s what CENTRE delivers for USD and eventually for many other world currencies.
This open standard approach is already providing momentum for USDC adoption, with over 30 industry ecosystem partners already announcing and implementing support for this new standard.
Q: Stablecoins, like USD Coin tokens, are backed by actual assets. How do you reduce the management risk incurred in operations?
A: A critical part of building trust for asset-backed tokens such as USDC is providing a robust governance scheme for issuers, which is exactly what CENTRE provides. CENTRE members must be regulated financial institutions, have monthly reviews by CPAs, and follow rigorous technical, operational and financial standards. Ultimately, globally adopted and mainstream frameworks for using crypto assets within the financial industry require compliance with regulatory frameworks and close coordination with governments.
Q: When will USD Coin token be launched in Asia? How about non-USD Coin tokens, for example, euro, pound, renminbi?
A: USDC is already being traded on Asian exchanges. CENTRE is considering other fiat-backed stablecoins now that USDC is live, and have leading Asian companies looking at becoming members and issuers of CENTRE-based stablecoins. CENTRE will also be expanding to include members and issuers from other currency zones.
Q: Do you expect the launch of USD Coin will accelerate the mainstream adoption of cryptocurrencies?
A: We believe that an open standard for fiat tokens is a critical infrastructure layer for this next phase of the internet, and we are hopeful that CENTRE’s protocols and standards can become foundations for a very broad range of new and innovative financial applications on the internet.
In the next couple of years, we expect the combination of blockchain scaling solutions and the integration of fiat stablecoins into consumer and mobile payment applications will usher in the mass adoption of crypto.
Q: With the cryptocurrency market slump since the beginning of this year, do you think the loss in market enthusiasm will bring any impact, positive or negative, on the development of blockchain technology and the mainstream adoption of cryptocurrency?
A: The speculative bubble in crypto asset valuations was ultimately unhealthy, and the significant drop in value is healthy. However, the bubble had the benefit of bringing an increasing amount of capital and talent into the ecosystem, and we are now seeing a significant acceleration in technical innovation and the maturation of the crypto industry.
I am more optimistic than I have ever been about the prospects for mainstream adoption of crypto assets and blockchain technology.
First part: Circle CEO says stablecoin offers secure value in crypto deals
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