US lawmakers are set for a heated debate on stablecoin regulation

Charles Cascarilla, co-founder and CEO of stablecoin issuer Paxos, is scheduled to testify before the House Financial Services Committee

Key stablecoin industry leaders will be outlining their vision for the future of digital asset oversight when US lawmakers reconvene this week for a heated debate on stablecoin regulation.

Among them, Charles Cascarilla, co-founder and CEO of Paxos, is scheduled to testify before the House Financial Services Committee on Tuesday, urging lawmakers to establish “cross-jurisdictional reciprocity” in stablecoin regulations.

In his prepared testimony, Cascarilla flagged concerns about the existing hurdles in the adoption of Paxos’ Global dollar (USDG) stablecoin due to it being issued via a regulated affiliate in Singapore.

“We fear that products like Paxos’ Global dollar stablecoin, issued by a regulated affiliate in Singapore, will languish while departments and agencies make their determinations,” the Paxos CEO wrote in his speech.

The US must act to prevent regulatory stablecoin arbitrage

Cascarilla recommended US lawmakers strengthen the current “international reciprocity language” to include clearly defined and accelerated timelines for the US Treasury Department to designate overseas jurisdictions for stablecoin regulation.

“This timeframe would force swift action and prevent bureaucratic delays while guaranteeing thorough scrutiny of foreign regulatory regimes,” the executive said.

Source: House.gov

The executive noted that potential delays in applying such action would be a major hurdle in the adoption and distribution of USDG in the US as well as cross-border operations.

“Reciprocity is not about lowering standards — it’s about raising them globally,” Cascarilla said, adding:

Paxos stablecoins were deemed non-compliant in the EU

Cascarilla’s remarks come amid some Paxos-issued stablecoins facing compliant issues in the European Union following the enforcement of Europe’s crypto regulation framework, the Markets in Crypto-Assets Regulation (MiCA).

Since the MiCA framework went into full force in December 2024, multiple crypto asset service providers in the EU — including Crypto.com and Coinbase — have announced delistings of Paxos stablecoins like Pax dollar (PAX) and Pax gold (PAXG).

While Paxos’ Cascarilla is now calling the US for urgent action in forcing a global framework for stablecoin issuers that are regulated outside of the US, some industry CEOs have urged all stablecoin firms to get regulated domestically instead.

In February, Circle co-founder Jeremy Allaire argued that all dollar-based stablecoin issuers should register in the US, citing consumer protection and fair competition in the crypto market. He stated:

Issued and regulated in the US, Circle’s USDC (USDC) stablecoin was officially approved as the first MiCA-compliant stablecoin in 2024.