Borderless CEO Kevin Lehtinitti said this in an interview with The Block.
The entrepreneur was involved in the launch of the "first fully reserve-backed" coin in the US, TrueUSD. The firm he now heads provides the infrastructure for financial institutions to integrate stablecoins.
In early April, Circle filed with the U.S. Securities and Exchange Commission for an initial public offering (IPO). The move was the realization of previously announced plans to become a public company.
Lehtinitti said the USDC issuer's falling profits in 2024 could reflect rising operating costs to comply with regulatory rules in order to gain regulatory approval.
The main competitor - the company behind USDT, Tether - takes a different approach. Comparing the number of employees, it is obvious that Circle spends "a lot of money" on licensing, compliance staff salaries, and lobbying, the expert noted.
In 2024, the company paid cryptocurrency exchange Coinbase, a former Centre consortium partner, $908 million to back USDC. The deal is Circle's "distribution" expense.
"It's not even the cost of the first position, but of holding the second position. A good warning for those wishing to launch their own stablecoin," Lehtinitti emphasized.
At the same time, he does not see Circle as having any "unique advantages" in terms of coin distribution. At the same time, PayPal has serious trump cards for PYUSD in the form of integration into the payment giant's existing products.
"World Liberty will have to prove it, but they probably have a very unique privilege to promote. I would suggest that being president [of the United States Donald Trump] gives you a certain priority," Lehtinitti said.
In March, DeFi-a platform whose control was consolidated by the Trump family- announced the launch of the USD1 dollar-stablecoin.
For Circle, Lehtinitti sees the only way to maintain its position is to get a favorable regulatory policy implemented that will drive out competitors. This can be realistically realized through lobbying, but such activities require "absolutely insane costs."
U.S. House of Representatives to vote on bill to regulate stablecoins
The US House Financial Services Committee has passed a framework bill STABLE Act to regulate "stablecoins", which will now go to Congress for a vote.
The document was approved with 32 votes in favor and 17 against. The authors received the support of six Democrats after "significant improvements" in areas like consumer protection.
Introduced by committee head French Hill and Digital Assets Subcommittee Chairman Brian Steil of the Republican Party, the legislation sets requirements for issuers of payment "stable coins."
The latter require disclosure of their activities and the provision of tokens.
Democrats have expressed concerns that the STABLE Act could be used for personal gain. Maxine Waters, a member of the Financial Services Committee, saw the initiative as an effort by the president "and his insiders to write rules of the road that will enrich themselves at the expense of everyone else."
According to FOX Business reporter Eleanor Terrett, representatives from Tether were involved in the creation of the bill.
CEO of USDT issuer Paolo Ardoino said that the company "closely follows the development of legislative work and interacts with supervisory authorities". This was his response to JPMorgan's statements about the coin's non-compliance with US Congressional initiatives.
Nansen's Opinion
Nansen analysts examined the Stable Act for its impact on the industry if approved:
- Winners - expected regulated issuers like USDC, PYUSD and banks would benefit from clear rules and timely compliance.
- Negatively impacted are algorithmic stablecoins (at least for now), tokens with yields in a 'limbo' state (payment "stablecoins" are not allowed to provide such an option).
- Prediction: market consolidation ahead; backend infrastructure (compliance, depository, etc.) will see significant growth.
Alternative
An alternative bill (GENIUS Act) is also making its way through Congress. It establishes supervisory and reserve rules for issuers. On March 13, the U.S. Senate Banking Committee approved iton March 13.
Both documents are awaiting debate in the House and Senate.
Lobbyists from the crypto-industry envision a coordinated effort to harmonize them to avoid delaying the process.
According to Terrett, the House of Representatives intends to move to consider the market structure bill on April 9.
