Global financial services company Circle announced that Bermuda became the first government to accept its stablecoin USD Coin (USDC) for tax payments.

Part of a broader government initiative to embrace stablecoins

According to a press release shared with Cointelegraph on Oct. 16, this development is part of a broader initiative, which sees the Bermuda government support “the use of USD-dollar backed stablecoins and decentralized finance protocols and services.”

Circle co-founder and CEO Jeremy Allaire said:

“Bermuda’s Premier made a broader announcement today about embracing stablecoins as the future of the financial system, with a focus on innovations in fintech that can deliver value not just for Bermudians, but also globally via company's licensed under their Digital Asset Business Act.”

Allaire also explained that Bermuda’s economy already relies on a United States dollar-backed currency, namely the Bermudian dollar. Because of this, he believes that “it’s natural that they would both embrace USD-backed stablecoins for their own government services.”

He also claims that this Bermuda’s initiative highlights that the world is on its path towards mainstream acceptance of stablecoins for everyday payments and commerce.

A comprehensive regulatory crypto framework

Circle also announced that the firm has been awarded a “Class F” license under Bermuda’s Digital Assets Business Act (DABA) of 2018. The company claims that this license makes the company the first major cryptocurrency exchange and wallet service ever to receive such a permit. Allaire commented:

“Through the DABA, Bermuda is one of the first countries in the world to create a comprehensive regulatory framework for digital currency and digital asset-based products and services, including licensing of firms operating payment systems using stablecoins. It will be interesting to see how other governments will respond to this fundamental innovation.”

USDC was launched about a year ago by Circle in partnership with major cryptocurrency exchange Coinbase. As Cointelegraph recently reported, Coinbase now allows holders of USDC to earn a 1.25% annual percentage yield.