Why Biden’s executive order on crypto is ‘a watershed moment’: Circle CEO

Jeremy Allaire, co-founder and CEO of Circle, speaks with Yahoo Finance's Jen Schonberger about the significance of President Biden's executive order on cryptocurrency.

Video Transcript

- President Joe Biden signed an executive order today calling on the government to formally study and develop a government-wide approach to regulating digital assets. For more on what this means for the crypto industry, we're welcoming in Jeremy Allaire, Circle co-founder chairman and CEO, as well as Yahoo Finance's own crypto reporter Jen Schonberger joining us now as well.

Jeremy, thanks for your time this afternoon. On Twitter earlier today, you called this a watershed moment for crypto, digital assets, and Web3 akin to the 1996-1997 whole-of-government wakeup to the commercial internet. Tell us more about what you think is significant about this move today.

JEREMY ALLAIRE: Well, you know, the comparison, I think, is an important one. Because you know, back at that point in the 1990s, the technology of the internet had developed. There was a lot of excitement. There's a lot of entrepreneurship. But there are a lot of questions. There are a lot of questions about how to regulate it, who were they going to be the regulators that should deal with it, what kind of posture should the US have in terms of competitiveness, innovation in this technology.

And those are exactly the same kinds of questions and the kind of circumstances we find ourselves in here with Web3 and crypto. And so why I think this is a watershed moment is that like then, the White House is saying, we're going to take a whole of government approach. We're going to look at this from all of the different angles, both the risks but also the opportunities.

What does this mean as a new infrastructure, as a new competitive infrastructure for the United States? What does the federal government need to do both to support that the US be strong in this industry but also to ensure that the risks, which there are many risks, are getting addressed? And so I think that whole of government approach is the kind of dialogue we need to be having on this really critical issue

JEN SCHONBERGER: Jeremy, Jennifer Schonberger here. It's great to see you. Obviously, this order is out. And a lot of us have seen it and have time to pore over it. But what are you hearing from the administration, lawmakers, agencies in Washington behind the scenes that you speak to, and not just on this executive order, but also the prospect of new legislation for stablecoins this year? Is that something you think we'll get?

JEREMY ALLAIRE: Yeah, I mean, I think one of the major policy issues that's identified in this executive order as well but also has come out of work from-- that the White House sponsored around the president's working group on financial markets was a critical piece of this infrastructure is, how's the dollar work in this new world? What is the-- the approach to regulate dollar digital currencies like stablecoins, how to ensure that it's safe, it's sound, but also ensure that financial market participants, households, firms know what the rules are so that this can grow and flourish?

It has grown a lot. But I think the federal government is seeing that US dollar competitiveness on the internet is a strategic national issue. And I think this executive order is going to advance that dialogue even further. And I think from a congressional perspective, we're seeing very strong bipartisan engagement around this issue. We're seeing both sides of the aisle leadership, others wanting to get this right, wanting to have something in place that provides clarity and a sound structure so that this commercial industry can grow while the risks are managed.

- There may be a willingness to get this right, but do you think there is the crypto expertise needed in the government right now to be able to move ahead with this whole of government approach? Or what level of participation are crypto industry members going to need to take here?

JEREMY ALLAIRE: Well, a couple things on that. I think one is we've seen an incredible increase in the amount of engagement that's happening both ways, meaning agencies, staff, congressional members staff, on many, many different areas really wanting to understand this. And you saw that in the House Financial Services hearing on crypto late last year-- really constructive across the board from-- from many members of Congress. And so I think you're seeing that coming from Congress, and certainly from an industry perspective, a huge increase on policy issues that's happening as well.

But I think what's important, the second kind of consideration here, is a big piece of what this executive order does is it orders federal agencies to get smart, to get educated, to do the work to understand this so that there aren't just decisions being made willy-nilly but that things are being thought through and thought through carefully and with consideration. And so I think in many ways, one of the biggest pieces here is that this is an order to the federal government to really understand this because of its importance.

JEN SCHONBERGER: Jeremy, one of the major items contained within this executive order is to study the prospect of whether the US should adopt a central bank digital currency. Given your vantage point as the largest private stablecoin issuer in the US, do you see the US eventually adopting a CBDC in time? And what does that mean for Circle?

JEREMY ALLAIRE: Yeah, I think there are a lot of questions about how or whether different governments around the world should be offering digital currencies. I think there is in many people's minds a sort of digital currency space race going on between China, who's operating a digital currency with a great deal of surveillance capabilities in it. I think there's questions that are coming out here in Washington around the role of the government versus the private sector. I think there's really critical questions around privacy, security, et cetera. So a lot of questions, and what the executive order does do is say we need to study this more.

But the other thing is, right now the here and the now of dollar digital currency is stablecoins growing fast. And the urgent request of the Treasury Department in their words is that we've got to get this right. We've got to have a regulatory framework here. And what you're hearing from Secretary Yellen in testimony from Chairman Powell in testimony is an understanding that digital currencies in the private sector, in the stablecoin space, are absolutely going to be a part of the financial system and are going to coexist with whatever the federal government determines it needs to do over time.

And so that coexistence, I think, is clear to everyone. And really, the job right now, in addition to research, which I think is really valid on this whole CBDC topic, is let's get a framework in place to regulate the innovation that's happening in the market today.

- Jeremy Allaire, Circle co-founder, chairman, and CEO and Yahoo Finance's own Jen Schonberger, thank you both so much.