SEC and stablecoins: Two experts weigh in on regulations

The SEC is usually seen as an unhelpful regulator, or an obstacle to growing crypto innovation in America. However, are there cases where crypto and DeFi regulation by the SEC could be a good thing?

During the Unchained podcast, host Laura Shin spoke to Greg Xethalis, chief compliance officer at Multicoin Capital, and Collins Belton, founding partner at Brookwood P.C. Together, they discussed positive use cases for regulation and the rise of stablecoins.

A question of control

Belton claimed that some DeFi companies warranted SEC regulation. He said,

The view was a controversial one. Crypto influencers like Peter McCormack and Vijay Boyapati strongly favor Bitcoin due to its decentralized nature. Bringing SEC regulation into DeFi could change the very meaning of the industry for many.

However, Belton added that the SEC needed to “give a quid pro quo” while recognizing industry changes.

Meanwhile, Xethalis spoke about data repositories as new regulatory tools. He said,

Befriending stablecoins

Coming to dollar-pegged stablecoins, Belton and Xethalis explored the SEC’s need to restrict these assets. After all, stablecoins represented dollar hegemony in yet another market.

Belton predicted,

For his part, Xethalis pointed out that the dollarization of crypto should have been desirable to policy makers.

American inflation

Congress is currently facing pressure to raise its debt ceiling lest it defaults on the U.S. debt. Against this backdrop, one can see why stablecoins and high-interest crypto products based on them could be a source of concern. USDC issuer Circle recently revealed it was “cooperating fully” with the SEC in an investigation, though further details are unknown.

Coming to Tether [USDT], the stablecoin saw $364.1 million in exchange outflows on 6 October.

Furthermore, the number of USDT sending addresses hit an 18-month low of 2,129.756

Source: Glassnode