The CEO of Circle says he sees “tremendous opportunity” stemming from a potential yuan-pegged stablecoin.
China is looking to make the yuan more prominent in the world financial system, and stablecoins — cryptocurrencies designed to hold a set value, typically pegged to a fiat currency — have become a way to “export” a currency by making it easier for global payments, Jeremy Allaire said in an interview with Reuters published Thursday (April 16).
“There’s a tremendous opportunity for a yuan stablecoin,” said Allaire, who is also Circle’s co-founder. “If there’s currency competition, you want your currency to have the best features possible. This is becoming a technological competition.”
He added that China could introduce a yuan-backed stablecoin in the next three to five years. Reuters had reported in August that the country was weighing a yuan-pegged stablecoin.
If that launch comes to pass, it would represent a massive shift in China’s digital asset policy, as the country outlawed crypto trading and mining in 2021.
The Reuters report notes that Circle’s USDC — the world’s second largest stablecoin after Tether’s USDT — grew 72% year on year in circulation to $75.3 billion by the end of last year.
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Allaire told the news outlet that Circle recorded “several billion dollars” in USDC transaction growth after the start of the U.S.-Iran war as rising geopolitical risks boosted increased the demand for portable digital dollars.
In other stablecoin news, PYMNTS wrote last week about the emergence of new regulations governing the coins, rules that seem to place more responsibilities on banks and FInTechs than might have been expected.
A rule proposed by the Federal Deposit Insurance Corporation (FDIC) last week under the GENIUS Act creates a framework that ties stablecoin issuance directly to reserve integrity, liquidity discipline and custodial oversight.
“Market design is now becoming a matter of regulatory compliance and balance sheet management,” PYMNTS wrote.
“The proposal makes clear that stablecoins will stand or fall on the quality and management of their reserves. Requirements tied to reserve assets, liquidity and risk management indicate that structure will determine utility in the wider financial services ecosystem.”
That emphasis is in line with what firms have been indicating. PYMNTS Intelligence research found a gap between interest in stablecoins and actual usage.
For example, more than 40% of middle market firms have at least discussed or tested stablecoins, yet only 13% say they have actually used them.