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(Kitco News) - Circle, the company behind USD Coin (USDC), the second-ranked stablecoin by market cap, is looking to expand its list of offerings to include a yen stablecoin now that Japan’s new rules governing stablecoins have come into effect.
During a recent interview with CoinDesk Japan, Circle co-founder and CEO Jeremy Allaire said that Circle has begun to consider opening a branch of the firm in Japan to be the operational center for a yen stablecoin following the enactment of the revised Payment Services Act (PSA) at the beginning of June.
Among other changes, the revisions to the PSA make it possible for companies to issue stablecoins that are positioned as an electronic payment method.
When asked about Circle’s view of the Japanese market – the third-largest economy in the world – Allaire pointed out that Japan has a long history of cross-border trade, foreign currency transactions, and global commerce. “If stablecoins become more widely used for such purposes, we believe that Japan will become an extremely large market,” he said.
“Specifically, the new stablecoin regulations that have just come into force are a crucial first step, providing a better framework for governments and stablecoin issuers,” he added. “It is also the first initiative to establish a framework for the use of stablecoins overseas. Not many countries have done this and I consider it the most important thing the government and the FSA have done.”
Following his recent participation at IVS Crypto 2023, which was held in Kyoto from June 28-30, Allaire said he believes Japan could be one of the most dynamic markets in the world for Web3 technology. “Having strong government support means that companies and developers can be proactive,” he said.
When asked specifically if Circle aims to become a stablecoin issuer in Japan, Allaire said “I am considering it very carefully. I am in Tokyo exploring and trying to understand different opportunities. I think Japan could be a very attractive market for Circle.”
“There are many potential partners in Japan, including extremely influential companies and companies that have cleared strict regulations,” he added. “We are very interested in what kind of partnerships are possible.”
Allaire said that Circle is currently investigating demand in Japan to determine if a yen stablecoin would be adopted. “We believe that currencies that are frequently used for trade and foreign exchange are potentially attractive,” he said. “Yen-linked stablecoins will be a new opportunity.”
SEC, regulations, and stablecoin adoption
Alliare pushed back against that view that the Securities and Exchange Commission (SEC) has not offered clear regulations around digital assets. “US e-money regulations and anti-money laundering requirements for crypto companies have been in place for a very long time,” he said. “So the idea that there is no clear regulation in the US is not accurate.”
He noted that USDC was started as a regulated product under the same rules as electronic money providers like PayPal and Apple Pay.
Allaire also pointed out that the process of establishing new rules around crypto is more of a challenge in the U.S. than in Japan because “the US requires a resolution of Congress to create new rules. As such, there is a tremendous amount of work being done to develop new US stablecoin rules, with input from the Federal Reserve, Treasury Department, White House, and Congress.”
He added that Congress could soon pass its first major resolution on a stablecoin bill. “By the end of next year, all major global markets will have established regulations for stablecoins,” he predicted.
“Stablecoins will become something like official electronic money, and their usage will spread everywhere,” he said. “We believe that the introduction of regulations in markets around the world will lead to greater mass adoption. Over the next three to five years, I believe that stablecoins will go from being used only in the cryptocurrency market to being used by people and businesses around the world.”
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When asked which markets he sees as the most promising for growth and real-world assets (RWA) tokenization, Allaire said that demand from emerging markets is increasing, specifically pointing to Africa, Latin America and Southeast Asia.
“Demand for USDC is very high in Southeast Asia,” he said. “Demand in Europe will also grow. Once regulation is put in place, it will create an environment in which fintech companies, financial institutions and businesses can use stablecoins for different types of transactions.”
When asked about how Circle’s stablecoins will be used around the world in the future, Allaire said the company’s focus “is on the use of a digital dollar that works across different financial institutions and different markets around the world.”
To achieve this, Circle is working to build things like open protocols and open standards that are easy for any developer to integrate and use. “This is USDC's development stance, and we believe that an open internet-based model is the most innovative,” he said. “We also believe in a full reserve model in which the assets backing the tokens cannot be lent out.”
Reflecting on the future of Circle, Allaire said that the company views itself as a financial platform, internet technology, and financial infrastructure company.
“Blockchain technology, the internet, open source software, all of these are now combined with a monetary system to upgrade the global monetary system to an internet-based financial system. To do that, we need a new type of company,” he said. “We will not be a lending company that takes risks. We are not a bank that takes risks. We want to provide the safest infrastructure, the safest utilities.”
