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- Circle asked the OCC to turn the GENIUS Act into clear rules for payment stablecoins.
- Strong redemption systems are needed to protect stablecoin users around the world.
- Fragmented rules could weaken liquidity, redemption, market trust, and settlement.
Circle has requested the Office of the Comptroller of the Currency transform the GENIUS Act into explicit rules for payment stablecoins. The issuer of the USDC supported a national system of stablecoin regulation in the United States in its May 1 comment.
As per a report, the company said U.S. standards should guide global stablecoin policy. It argued that American regulation and the rule of law should become the benchmark for trusted digital dollars.
Circle also called for payment stablecoins to function as one unified instrument. It said they should remain transferable, fungible, and interoperable across platforms and borders.
The firm warned that fragmented rules could damage liquidity and redemption. It said such gaps could weaken confidence in stablecoins used for payments and settlement.
Circle Seeks Clear Standards for Stablecoin Issuers
Consumer protection was a major part of the filing. Circle said issuers should maintain effective redemption systems for stablecoin holders worldwide.
The company said users must be able to exchange stablecoins for fiat currency when they choose. It described that promise as central to trust in payment stablecoins.
Circle also urged regulators to protect the meaning of the word stable. It said products should not carry that label without strong oversight.
The company said consumers and businesses should not have to study complex disclosures to understand basic protections. It said clear standards would help prevent confusion in the market.
The filing also requested the same treatment of issuers. Circle said that the same should apply to banks and nonbanks alike.
It further indicated that local and foreign companies ought to be subjected to the same standards. The company attributed that strategy to healthy competition and regulatory transparency.
Circle remarked that risk controls are needed to equal the importance of stablecoins as payment and settlement tools. These controls need to address credit, liquidity, concentration, operational, and anti-money laundering risks.
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Another issue that the company tackled was that of tokenized deposits. It claimed that Congress did not include them in the GENIUS Act since they play a different role.
Circle says that payment stablecoins can facilitate extensive transfers and settlement. By contrast, tokenized deposits are a liability to the bank and require distinct regulations.
GENIUS Act Sets Foundation for USD-Backed Stablecoins
The GENIUS Act is considered to be a breakthrough in respect to USD-backed digital currency. Circle reported that the OCC proposed rule is required to transform the law into the practical demands.
The suggested regulation is based on the key principles of the Act. These are solid reserves, reliable redemptions, prudent risk management, supervision, and high compliance standards.
Reserve management, information security, operational strength, and uninterrupted availability of the system are also covered by the rule. Circle claimed that those regions are important to the stablecoins used in payment systems.
The company claimed that the ecosystem of stablecoins is still growing. It reported that payment stablecoins are increasingly assuming a significant role in international finance.
The filing of Circle also indicates a broader effect of the policy. The adoption of the GENIUS Act by the OCC may influence the regulatory practices in countries outside the United States.
The comment period is still included in the overall rulemaking process. Regulators are yet to determine how to achieve a balance between innovation, consumer protection, and risk management in future stablecoin policy determinations.
Also Read: Polygon Uses Zero-Knowledge Proofs to Hide USDC, USDT Transfers
