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Circle exec Dante Disparte calls on Congress to pass legislation to regulate stablecoins

Yahoo Finance’s Jennifer Schonberger joins the Live show to discuss Circle Chief Strategy Officer Dante Disparte’s call on Congress for the urgent approval of stablecoin regulation.

Video transcript

RACHELLE AKUFFO: All right, well, turning now to Yahoo Finance's Jennifer Schonberger, who's been following this story all day and has more on this. Hey, Jennifer.

JENNIFER SCHONBERGER: Hey there, Rachelle. That's right. Just spoke with Circle's Chief Policy Officer and Head of Strategy Dante Disparte, who is urgently calling on Congress to pass legislation to regulate stablecoins in the wake of Silicon Valley Bank's failure that led their stablecoin to break the buck.

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In a conversation just moments ago, Disparte saying that he favors legislation from House Financial Services Committee Chair and Ranking Member Patrick McHenry and Maxine Waters. Disparte telling me, quote, "I have been uploading to the internet since 2019. And since 2019, there has been an ongoing persistent conversation about risk. And we've been met with complete inaction."

"I do think if this is the digital assets Dodd-Frank moment, then it is the time to act. Just as it took 2008 to get comprehensive banking reforms, I think it's well past time that the US acts. And to act is not to ban innovation, it's to encourage responsible innovation. But there is a shortfall in action right now"

Now, Disparte also told me it was a run on a bank that triggered a loss of confidence in a fully reserved digital dollar. He says, that's the irony. Whereas, with the Tarra LUNA blowup, he called that financial alchemy of the very worst kind. He says, the way Circle operates is more conservative than the Paypals of the world, and it was a loss in confidence in a bank that triggered a crisis and risk in Circle's business.

Now, Circle's stablecoin broke the buck after it revealed that it had a $3.3 billion in reserves tied up in Silicon Valley Bank, causing investors to dump the stablecoin. Circle pledged from its balance sheet over the weekend to make any holder whole If the bank didn't go through an orderly wind down. And that helped to restore that deep peg on the chain.

Circle holds 80% of its reserves in short term treasuries and 20% in cash. As a depositor of Silicon Valley Bank, Circle will be made whole by the FDIC. Now, Rachelle, Disparte told me that there is a serious policy conversation that needs to be had here. And that regulators' intervention over the weekend was the right move to stave off contagion. I will have more on our website on finance.yahoo.com. Rachelle.