- Jeremy Allaire says it is unlikely that Iran will accept USDC in the Strait of Hormuz.
- Circle operates a strict compliance infrastructure in partnership with the authorities.
- CLARITY Act’s yield adjustment will not affect Circle’s operations directly.
Circle CEO Jeremy Allaire has dismissed the idea that the USDC would be used to settle transit tolls in the Strait of Hormuz by the Iranian regime. According to Allaire, Circle operates a highly compliant infrastructure and works closely with law enforcement and sanction authorities.
Sactioned Entities Avoid Using the USDC
Allaire made the statement during a press conference on his visit to South Korea to meet with exchanges, banks, and regulators. His clarification comes amid the prolonged US-Israel-Iran war and the inability of the warring parties to reach an agreement, potentially extending Iran’s stance on blocking the crucial waterway.
Butressing his stance on USDC’s strict protocols, Allaire cited public research from the United Nations and forensic firms that revealed that sanctioned entities preferred to use other stablecoins for their activities over USDC. He stated that it is highly unlikely that a regime under sanctions would attempt something where the likelihood of freezing the asset is extremely high.
Circle is High on Compliance
While answering questions from journalists, Allaire defended his firm’s six-hour delay before reacting during a recent breach on Drift Protocol. On April 1, hackers attacked the platform, stealing $285 million, bridging over $230 million of the stolen funds in USDC from Solana to Ethereum. Circle took no action to freeze the funds through the six-hour window.
Responding to the question, Allaire noted that Circle complies with strict legal obligations and can only freeze wallets at the direction of law enforcement or courts. According to him, his company does not independently decide what the right path is. In Allaire’s opinion, allowing a private firm to make such decisions creates a “very significant moral quandary.”
CLARITY Act Adjustment Won’t Affect Circle
However, the Circle Executive acknowledged the gap in the current operational framework, noting that his firm is pushing for the CLARITY Act to include “safe harbors” that would allow issuers to freeze funds preemptively under extreme circumstances. According to Allaire, that needs to become law, and not what companies can decide on their own.
In the meantime, Allaire noted that the CLARITY Act’s proposed ban on passive stablecoin yield does not affect Circle directly. He noted that the GENIUS Act already forbids stablecoin issuers from paying interest to holders. Allaire thinks it is distributors, such as exchanges and wallets, that would feel the effect of the adjustment.
According to him, such entities can still offer activity-based rewards, but cannot market stablecoin holdings as substitutes to bank deposits.
Related: Iran Demands Cryptocurrency Toll for Strait of Hormuz Transit
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
