Lawmakers in the United States are gearing up for an intense discussion on the regulation of stablecoins, with prominent figures from the industry anticipated to share their perspectives on the future of digital asset oversight.
Charles Cascarilla, co-founder and CEO of the stablecoin issuer Paxos, is scheduled to present his insights to the House Financial Services Committee, where he will advocate for lawmakers to implement “cross-jurisdictional reciprocity” in stablecoin regulations.
In his prepared remarks, Cascarilla raised concerns regarding the current barriers to the adoption of Paxos’ Global Dollar (USDG) stablecoin, which is issued through a regulated partner in Singapore.
“We are concerned that products like Paxos’ Global Dollar (USDG), issued by a compliant affiliate in Singapore, will stagnate as agencies deliberate,” Cascarilla stated in his address.
The US must take action to avoid regulatory stablecoin arbitrage
Cascarilla suggested that US lawmakers enhance the existing “international reciprocity language” by incorporating clearly defined and expedited timelines for the US Treasury Department to identify international jurisdictions for stablecoin regulation.
“This timeline would compel prompt action and mitigate bureaucratic delays, while ensuring a thorough examination of foreign regulatory frameworks,” the executive commented.
Image Credit: House Committee on Financial Services
Cascarilla underscored that any delays in implementing such actions could pose significant challenges to the adoption and distribution of stablecoins like USDG within the US and in international markets.
“Reciprocity isn’t about lowering standards — it’s about enhancing them on a global scale,” Cascarilla remarked, adding:
“By establishing a framework to acknowledge jurisdictions with comparable regulatory systems — including reserve requirements, AML protocols, and cybersecurity safeguards — the United States can circumvent regulatory arbitrage, preventing issuers from exploiting lenient oversight elsewhere.”
Paxos stablecoins face compliance issues in the EU
Cascarilla’s comments arise as some stablecoins issued by Paxos confront compliance challenges in the European Union, following the rollout of its regulatory framework for cryptocurrencies, known as Markets in Crypto-Assets (MiCA).
Since MiCA became fully operational in December 2024, various crypto service providers in the EU, including Crypto.com and Coinbase, have announced the delisting of Paxos stablecoins such as Pax Dollar (PAX) and Pax Gold (PAXG).
While Cascarilla is now urging the US to take immediate action to create a global regulatory framework for stablecoin issuers operating outside of the US, other industry leaders have called for all stablecoin businesses to pursue domestic regulation instead.
In February, Jeremy Allaire, co-founder of Circle, asserted that all dollar-pegged stablecoin issuers should register in the US, emphasizing consumer protection and equitable competition in the cryptocurrency landscape. He stated:
“Whether you’re an offshore entity or based in Hong Kong, if you wish to offer your US dollar stablecoin within the US, registration here is essential, just as we have to register in all other jurisdictions.”
Circle’s USDC stablecoin, which is issued and regulated in the US, was the first to receive approval as a MiCA-compliant stablecoin in 2024.
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