Circle Chief Strategy Officer: The War on Stablecoins Has Just Begun

Compilation | Deep Tide TechFlow

Guest | Dante Disparte, Chief Strategy Officer and Head of Global Policy and Operations at Circle

Host | Laura Shin

Key Takeaways

After years of hostility, the United States has finally passed its first federal law regarding the cryptocurrency industry.

The bipartisan stablecoin legislation, the "GENIUS Act," was signed into law by President Trump after a last-minute standoff in Congress. Although the bill was considered a "done deal," its passage became tumultuous this week as Democrats raised objections over Trump's ties to cryptocurrency, and the Freedom Caucus suddenly rebelled against provisions related to central bank digital currencies (CBDCs).

Now that the bill has passed, what impact will it have? Who will benefit or suffer from it?

In this episode, Circle's Chief Strategy Officer Dante Disparte—one of the key figures behind this legislation—explains the following:

· How the bill garnered bipartisan support amid political tensions

· Why banks may think twice before issuing stablecoins

· Why Circle is applying for a national trust bank charter

Additionally, the episode discusses the debate surrounding interest-bearing stablecoins, how this bill fits into the broader financial regulatory framework, and whether American consumers and the dollar will benefit as a result.

Highlights

· The right to use currency should be as free as possible.

· The key point is that the cryptocurrency industry has finally achieved the long-desired legitimacy, a clear path in U.S. law and regulation, and an opportunity for competition.

· The significance of the "GENIUS Act" goes far beyond cryptocurrency itself. It may be the first financial regulatory bill in U.S. history aimed at promoting growth, competition, and consumer protection, with a core focus on establishing clear rules for the market and building a rules-based competitive environment.

· The "GENIUS Act" establishes clear rules for the market, ultimately benefiting American consumers and market participants, while further solidifying the dollar's position in the global economy.

· The most important aspect of the "GENIUS Act" is the concept of international reciprocity, which empowers the U.S. Treasury to promote the American regulatory framework globally. This is crucial as it ensures that the U.S. can take a leading role in the formulation of international rules rather than passively accepting those set by other countries. This applies not only to cryptocurrency but also to the global use of stablecoins.

· Throughout my career, I have often represented U.S. interests at international institutions and government bank meetings. Although I am a representative of the private sector, this time, the U.S. finally has a formal voice in the formulation of these rules.

· There remains a significant gap in global financial access, and both the U.S. and other countries urgently need alternatives to payment systems. Many companies in the future may compete around data, viewing it as an asset. In this era where data is referred to as "the new oil," can blockchain become the "new tool" for carrying this data? This is a question worth pondering.

· The fully reserved stablecoin model addresses a core issue from the early days of cryptocurrency—the regret consumers feel due to price volatility. This asset serves not only as a pricing mechanism for crypto transactions but also as an important medium of exchange in the internet economy.

· The "GENIUS Act" and the upcoming U.S. market structure regulatory bill will gradually shift cryptocurrency and blockchain technology from obvious applications to deeper infrastructure, with their impacts becoming progressively evident.

· I hope that in the next five years, we can not only solidify the dollar's position as the core currency of the internet economy and leverage it as a strategic advantage for the U.S. in global competition but also enable more people to enjoy safe and reliable financial services based on smart devices.

"Crypto Week" Better Than Anyone Expected

Laura: This is a very important moment for the cryptocurrency industry. This week marks the end of what Congress has dubbed "Crypto Week." We are discussing the "GENIUS Act," the first major cryptocurrency legislation in the U.S., which will soon be signed into law by President Trump. This bill is the result of years of collaborative efforts by multiple members of Congress aimed at regulating the development of stablecoins. Before we started recording, you mentioned that you have been fighting for this for seven years. While many believed this bill would pass smoothly at the beginning of this administration, the actual process turned out to be much more tumultuous.

So, what led to this suspense, and how did it ultimately pass?

Dante: Yes, if "Crypto Week" didn't have some political maneuvering and dramatic elements, it wouldn't feel complete. One of the most dramatic events this week was the opposition to central bank digital currencies (CBDCs), which indeed surprised many.

However, the key lies in the final outcome, which actually exceeded everyone's expectations. First, the "GENIUS Act" passed with over 300 votes in support, with 102 Democratic members voting alongside Republican members. The passage of this bill in the current highly polarized political environment in the U.S. is clearly a significant bipartisan achievement, reflecting national interests and the dollar's important position in the global economy. This is undoubtedly a tremendous accomplishment.

Additionally, two other bills also made significant progress. The "Clarity Act" is the House's response to legislation on cryptocurrency market structure, which also received broad bipartisan support and is expected to undergo in-depth discussions in the Senate. Another provision opposing CBDCs further indicates that the U.S. will actively engage in global digital currency competition by regulating dollar stablecoins.

How the "GENIUS Act" Won Bipartisan Support Amid Major Political Friction

Laura: As you mentioned, this bill ultimately garnered broad support. However, during the process, we also saw many objections from Democrats regarding the Trump administration's business activities related to cryptocurrency, especially concerning the initiative by World Freedom Finance to launch its own stablecoin.

I'm curious, how were Democrats persuaded to vote in favor of this bill in greater numbers? After all, it seemed unlikely in the early stages.

Dante: First, to be frank, cryptocurrency legislation has become a bipartisan issue in the U.S. This makes me joke that I have facilitated unity in Washington twice in my career. The first time was when the Libra project was launched, and both Republicans and Democrats united in opposition to it, leading to many hearings and controversies. Nevertheless, this opposition prompted an unexpected unity between the two parties.

Fast forward to today, this bill underwent numerous hearings, inter-agency meetings, and public consultations. The Biden administration issued an executive order on digital assets, while the Trump administration took a sincere and growth-oriented whole-of-government approach to promote the development of related technologies, especially in areas related to artificial intelligence. However, without properly addressing these key interests, including potential political divides, it would have been difficult for the "GENIUS Act" to gain the support of 18 Democratic senators in the Senate, let alone achieve such significant success in the House. Therefore, this is undoubtedly an important victory.

For us, the key is that the cryptocurrency industry has finally achieved the long-desired legitimacy, a clear path in U.S. law and regulation, and an opportunity for competition.

Why Dante Believes the Bill's Significance Goes Beyond Cryptocurrency Itself

Laura: Currently, Circle is widely regarded as one of the biggest winners of this bill. So, what specific regulations does this bill impose on the types of companies it regulates? Which companies are included, and which are excluded? Clearly, some companies can legally conduct stablecoin-related business in the U.S., while others must meet higher standards to enter this field. Can you briefly explain the impact of this bill on different types of participants and how it changes their operating models?

Dante: First, I believe the significance of the "GENIUS Act" goes far beyond cryptocurrency itself. It may be the first financial regulatory bill in U.S. history aimed at promoting growth, competition, and consumer protection, with a core focus on establishing clear rules for the market and building a rules-based competitive environment. I'm pleased to share some unique aspects of this bill.

First, it preserves the states' regulatory authority over banking and payments, which has been a significant obstacle in past attempts to legislate stablecoins. The U.S. financial system features "fintech federalism," where states independently regulate banking and payments. The "GENIUS Act" respects and continues this tradition. Additionally, under the bill, banks, non-bank entities, and credit unions can issue dollar-denominated payment stablecoins with a scale of $1 billion or more. These entities need to be incorporated into the federal regulatory framework, primarily overseen by the Office of the Comptroller of the Currency (OCC), while also promoting the possibility of international competition.

The bill also includes many nuanced provisions, such as those regarding the portability of international products, ensuring that products compliant with similar regulatory structures in other countries can circulate freely between the U.S. and abroad. Notably, there is the so-called "Libra clause." According to this clause, if a non-bank or commercial company wishes to issue stablecoins, or if those products may be classified as Vanity Stablecoins (Note: Vanity Stablecoin is an emerging concept that allows users to create customized stablecoins based on their preferences or identity, typically using blockchain technology), they must not only establish an independent entity (similar to Circle, rather than a bank) but also address a series of antitrust issues and ultimately obtain approval from the Treasury's special committee. This sets important protective mechanisms for the market while raising the entry threshold. For banks, if they plan to issue stablecoins under the "GENIUS Act," they must establish independent entities, separate from their core banking operations, and manage the issuance and redemption of stablecoins in a completely different manner than traditional banks manage loans and credit creation. This regulatory approach is even more conservative than the so-called deposit token era.

This raises an important question: Are banks willing to adopt a conservative asset-liability management strategy, avoiding risks, not using leverage, and not lending, focusing solely on the issuance of stablecoins? Or are they more inclined to participate in this niche market by providing core banking services? Overall, this bill establishes clear rules for the market, and I believe the ultimate winners will be American consumers and market participants, while further solidifying the dollar's position in the global economy.

How Circle Plans to Compete with Banking Giants

Laura: Let's talk about the movements of big banks. This week, Bank of America, JPMorgan Chase, and Citibank are all working to launch stablecoins or at least considering the issue. While this bill does not fully cover the actions of these banks, they are indeed operating in the same space as Circle. JPMorgan is also planning to launch deposit tokens. Currently, Circle's USDC is primarily used for trading and decentralized finance (DeFi) and has become its largest commercial partner through collaboration with Coinbase. Additionally, USDC will be used by millions of Shopify merchants on Coinbase's Base network.

So, Circle currently appears to be a crypto-native project, while these banks have a broader distribution among non-crypto users, clearly representing a larger market. How does Circle plan to compete with these big banks?

Dante: That's an interesting question. I believe that in discussions about competition among banks, non-banks, and even central banks regarding digital currencies, our operating model and long-term belief have always been that once very clear road rules are established, tokenized forms of currency are not the breakthrough; in fact, the technological breakthroughs in banking and payments lie in the infrastructure.

Our long-term vision is to build an internet-based financial system that enables global connectivity of funds and financial services through blockchain technology. As you know, USDC is a multi-chain innovation aimed at promoting interoperability between different blockchains. It is dedicated to building a trusted financial infrastructure that can bring funds and financial services to areas that traditional banking and payment systems cannot reach.

This is not a strategy that opposes banks. In fact, our strategy heavily relies on collaboration with banks, leveraging the trust and security systems they have built in the real economy. The introduction of the "GENIUS Act" will undoubtedly trigger competition on multiple levels, which is a positive driving force for the U.S. economy and the entire market category. At the same time, it is also the best way to ensure that digital assets and cryptocurrencies can achieve scalable adoption, as all of this requires complete interoperability with the traditional financial system.

Another key point is that before the "GENIUS Act" was introduced, the U.S. lacked a clear regulatory framework for cryptocurrency and non-bank payment systems. Take the Libra project as an example; due to the lack of relevant laws in the U.S., Libra ultimately chose to establish itself in Switzerland, where it could be regulated as financial infrastructure. The implementation of the "GENIUS Act" provides the U.S. with an "America First" institutional framework while avoiding the limitations of "America going it alone." This allows companies like Circle, as well as other American businesses including traditional banks, to compete in the global market without worrying that their business models or internet-based digital dollars will be constrained by the rules of other countries. This is particularly important as the competition between stablecoins and central bank digital currencies (CBDCs) is increasingly becoming a focal point in the global financial arena. Discussions over the past week indicate that many countries and financial institutions are trying to reduce their reliance on the dollar while seeking alternative payment systems.

Laura: Okay, I want to confirm one of your points. I initially thought this bill was primarily aimed at domestic business activities in the U.S., but from your description, it seems it may also impact the use of stablecoins in other countries?

Dante: Absolutely correct. This is actually an important provision in the "GENIUS Act," initially proposed in the House. You may recall that there were different proposals regarding stablecoin legislation between the House and the Senate. The House's proposed bill was called the "Stable Act," while the Senate's proposal was the "GENIUS Act."

Ultimately, the "GENIUS Act" absorbed many of the improvements from the House version, thus gaining the support of 102 Democratic members. The most important point is the concept of international reciprocity, which empowers the U.S. Treasury to promote the American regulatory framework globally. This is crucial as it ensures that the U.S. can take a leading role in the formulation of international rules rather than passively accepting those set by other countries. This applies not only to cryptocurrency but also to the global use of stablecoins. For me personally, this is also an important milestone. Throughout my career, I have often represented U.S. interests at international institutions and government bank meetings. Although I am a representative of the private sector, this time, the U.S. finally has a formal voice in the formulation of these rules.

What Circle Hopes to Achieve by Applying for a National Trust Bank Charter

Laura: At the end of June this year, Circle submitted an application to create a national trust bank in the U.S. This will allow Circle to directly manage its reserves and provide cryptocurrency custody services to institutional clients. Please elaborate on Circle's plans for this national trust bank.

Dante: Yes, custody and safeguarding services are part of our plan. Additionally, with the implementation of the "GENIUS Act," non-bank stablecoin issuers in the U.S. must obtain a charter and trust license from the Office of the Comptroller of the Currency (OCC). Therefore, our initiative is clearly a proactive move to prepare for future regulatory requirements. This strategy is not surprising, as it aligns with how we operate under the regulatory framework of the Markets in Crypto-Assets (MiCA) in Europe.

Our business goal has always been to pursue excellence. When Europe spent years developing the MiCA framework, we realized we needed to establish a branch in Europe. To that end, we chose France and obtained an electronic money license, ensuring that Circle's USDC and euro stablecoins became some of the first products compliant with MiCA regulations. Therefore, it is logical for us to adopt a similar model as U.S. regulations evolve.

Laura: I also want to ask a question about competing with big banks. Fortune recently reported that JPMorgan plans to charge fintech companies for using its data. Suppose there is a fintech company, like Plaid, that connects Coinbase (your largest partner) with customer banks. If that bank is JPMorgan, the previously free data interface may start to incur fees. Do you think this change would hinder Circle's development? How would Circle respond if similar bank charges were to occur?

Dante: This is indeed a complex issue, and it is currently difficult to predict the specific impact. However, one thing is clear: the issue of the legitimacy of currency usage has been contentious for years, and this is one of the reasons I entered this industry. I have always believed that the right to use currency should be as free as possible.

Moreover, the payment methods of traditional banking systems are akin to the era of landline telephones, where the longer the call, the higher the cost. Therefore, many companies in the future may compete around data, viewing it as an asset. In this era where data is referred to as "the new oil," can blockchain become the "new tool" for carrying this data? This is a question worth pondering.

Why Financial Privacy is So Important in the U.S. System

Dante: The demand for financial privacy in American society is deeply rooted, which is also one of the main reasons for opposing central bank digital currencies (CBDCs). However, truly safeguarding financial privacy is not easy; only by establishing clear rules and a fair competitive system can we provide users with complete financial services safely and privately. Crypto wallets play an important role in this process, providing users with secure tools to store and manage cryptocurrencies while protecting personal privacy.

Currently, stablecoins are achieving this goal through the dollar, while mobile digital wallets, open-source wallets, and blockchain infrastructure collectively support this competitive system, ensuring it covers every user comprehensively. In a world after the passage of the "GENIUS Act," consumers will have more choices, enjoying financial services while protecting their privacy. If some large institutions attempt to compete by monetizing data, the implementation of the "GENIUS Act" will provide consumers with alternatives, allowing them to do so without sacrificing their privacy.

What is the Difference Between Deposit Tokens and Stablecoins?

Laura: Recently, the topic of deposit tokens has begun to gain attention, and I wasn't familiar with this concept before. Each unit of a deposit token represents a portion of a bank deposit. So, how does it differ from the use of stablecoins? Do deposit tokens have the potential for widespread application? In what scenarios might they be used? Is there a competitive relationship between them, or are they merely different in terms of usage? How should consumers view the two?

Dante: This question is indeed somewhat complex. As a supporter of the movement against central bank digital currencies (CBDCs), I have studied this in depth and supported my views with some academic papers. There is indeed some similarity between deposit tokens and stablecoins. The "GENIUS Act" allows banks to issue payment stablecoins but stipulates that payment stablecoins issued by banks are the only legal products. The bill sets forth some key requirements for payment stablecoins.

If I were a board member of a large bank, I would focus on the following issues: First, the issuer cannot directly pay yields, meaning this digital currency will not compete with traditional deposit business but is a form of fully reserved digital currency. This raises a question—if a deposit token is issued by a failing bank (like Credit Suisse), would you accept it? Because if a deposit token fails to comply with the "GENIUS Act," it could become a digital representation of the risks on the bank's balance sheet. This means your right to redeem it at face value for dollars could be affected by the bank's loan, credit risk, term risk, and other factors. Therefore, the "GENIUS Act" requires banks to issue stablecoins through independent entities and independent balance sheets to ensure their safety.

Moreover, the "GENIUS Act" completely ends the era of misleading stablecoins. For example, cases like Terra Luna can no longer be traded in the U.S. If a stablecoin issuer fails to prove the authenticity of its assets (i.e., through the "Jerry Maguire Test"—Note: This is a metaphor commonly used in entrepreneurship, investment, or product development, originating from the classic film "Jerry Maguire." The protagonist loses most of his clients for sticking to his principles but ultimately wins a loyal client. Here, the "Jerry Maguire Test" can be understood as a key step in validating market demand and early ecosystem support, serving as an important indicator of whether a stablecoin can stand firm in a competitive blockchain ecosystem.), it could even face criminal penalties. The "GENIUS Act" imposes strict requirements for trust, transparency, and auditability, holding responsible parties criminally liable. This ensures that counterfeit digital dollars will no longer appear under the guise of stablecoins and ultimately collapse.

What Actions Might Circle Take When Interest-Bearing Stablecoins Are Finally Approved?

Laura: I know that stablecoins themselves have certain centralized characteristics, but they are completely different from the situation with Terra Luna. However, I want to discuss interest-bearing stablecoins. Clearly, current laws do not allow for the existence of such stablecoins, and this provision does not fully align with consumer interests. In some ways, this even seems somewhat counterintuitive, as this provision is actually pushed by the Democrats. However, this is a positive for Circle and similar companies. I understand that the law will not change in the short term, but in the future, when consumers realize that this provision is not friendly to them, it may drive policy adjustments. If the law allows for the emergence of interest-bearing stablecoins, Circle may need to compete to attract more customers, such as offering yields to consumers. While this may not be your current focus, I think this situation could happen in the future.

Dante: We have indeed considered this issue. Let me share our perspective. The fully reserved stablecoin model addresses a core issue from the early days of cryptocurrency—the regret consumers feel due to price volatility. Bitcoin has gradually lost its function as a medium of exchange on the internet due to its price volatility and appreciation, being redefined as digital gold rather than a daily consumption asset. For example, the "Bitcoin Pizza Day" incident is a typical case that spurred the demand for fully reserved stable assets. This asset serves not only as a pricing mechanism for crypto transactions but also as an important medium of exchange in the internet economy.

Currently, both MiCA and the "GENIUS Act" prohibit stablecoin issuers from directly paying yields to token holders, but we believe that yield is a key characteristic of cryptocurrencies. Through secondary markets, DeFi, and lending functions associated with programmable currencies, yields can be realized. The "GENIUS Act" prohibits regulated issuers from directly paying yields, but yields as an innovation in the secondary market are one of the core functions in this field. Just as physical dollars create loans and credit on bank balance sheets, fully reserved stablecoins also become an important foundational layer of the internet economy. Unlike traditional funds, consumers can enjoy other advantages of funds, such as liquidity unaffected by bank holidays, programmability, composability, and the flexibility of DeFi. If the funds themselves are not fully reserved or carry risks, these advantages cannot be realized. This is also why we support the "GENIUS Act" and MiCA, as these two proposals have become the legal foundation for stablecoins in Europe and the U.S.

Additionally, the U.S. needs further regulatory structure for the cryptocurrency market to address other issues in the market, such as how to define commodities, securities, and digital collectibles, and how to handle integrated economic activities that span banking, payment regulation, and capital markets. I believe that innovations in the secondary market and the yield function of stablecoins will welcome new development opportunities in this field.

Laura: I have a few more questions regarding Circle's recent IPO. The stock was trading at around $234 an hour ago, far above the IPO price of $31.

I'm curious about the atmosphere within the company since the IPO, as I think there may be a gap between the expectations before the IPO and the actual results, at least in the cryptocurrency space. Is this your feeling as well? Or were you shocked?

Dante: Unfortunately, I cannot speak for the entire Circle on this issue. I can't say much about the stock price or the IPO itself, but becoming a publicly traded company has always been a long-term goal for Circle. As a public company, we remain focused on the core principles that drive the company's growth, which is long-term development. This may be the most I can share.

However, I believe the real news focus right now is the "GENIUS Act." In fact, I am currently heading to the White House to attend a signing ceremony for a law that I have personally invested a lot of effort into. This moment is significant not only for the company but also for the entire country and market, as we finally have legal clarity in the U.S.

How This New Law May Affect Ordinary Americans and Their Finances

Laura: One last question. Looking ahead five years, how do you think this law will impact the lives of ordinary Americans, consumer rights, and the U.S.'s position globally?

Dante: I once wrote an article titled "How We Change the World When Blockchain Is No Longer a Topic." I owe the publication of this article to you, Laura Shin, as you were the editor at Forbes who gave me this opportunity. I believe that the "GENIUS Act" and the upcoming U.S. market structure regulatory bill will gradually shift cryptocurrency and blockchain technology from obvious applications to deeper infrastructure, with their impacts becoming progressively evident.

I hope that in the next five years, we can not only solidify the dollar's position as the core currency of the internet economy and leverage it as a strategic advantage for the U.S. in global competition but also enable more people to enjoy safe and reliable financial services based on smart devices. These services will not only include simple payment functions but also cover complex financial activities such as savings, loans, and credit, bringing greater convenience and benefits to consumers. Thus, the U.S. has officially entered this field.

Just yesterday, I attended a global conference where I interacted with about forty to fifty representatives from international regulatory agencies and central banks. This is the first time in my seven years in this field that I can confidently say that the U.S. is establishing a legal framework for the cryptocurrency and blockchain industry, no longer relying solely on the performance of the private sector to represent the nation.

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