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Stablecoins Better Suited for Yuan’s International Appeal, Not CBDCs: Circle CEO

Tim Fries

Published: July 11, 2023 6:51 pm

Jeremy Allaire, CEO of USDC issuer Circle, thinks that a stablecoin pegged to the Chinese yuan could help internationalize the national currency better than a central bank digital currency (CBDC). While he doesn’t believe China will regulate crypto trading soon, support for stablecoins may be considered. Meanwhile, China remains a leader in CBDC with its digital yuan project, which started development in 2014.

Circle CEO Thinks China Could Eventually Support Stablecoins

Circle co-founder and Chief Executive Jeremy Allaire acknowledged China’s hostile stance toward cryptocurrencies. However, he believes that the rollout of a yuan-backed stablecoin could be more effective when internationalizing the country’s national currency than a CBDC.

“If eventually the Chinese government wants to see the RMB used more freely in trade and commerce around the world, it may be that stablecoins are the path to do that more than the central bank digital currency.”

– he said in an interview with South China Morning Post.

Allaire referred to a digital stablecoin pegged to the offshore yuan (CNH) to back his point. The team that developed the CNH Coin – which also makes another stablecoin pegged to the Hong Kong dollar – was arrested earlier this year, Chinese outlets reported. The authorities did not explain the reasons behind the detention.

In his interview, Allaire reflected on recent Hong Kong’s Web3 efforts and how the city attempts to catch up to other markets embracing digital assets to stay relevant. While he does not think mainland China will regulate crypto trading for the time being, he does believe the country could consider stablecoin regulation.

China is a Leader in CBDCs

Allaire’s remarks on how stablecoin could potentially prove more effective than a digital yuan (e-CNY) come even though China is the most advanced jurisdiction regarding CBDC developments. The world’s second-largest economy has been making significant endeavors in this field recently, including the rollout of digital yuan loans to local businesses and individuals.

More recently, e-CNY has received support from WeChat, the Chinese super app with over 1.2 billion users. Specifically, WeChat implemented a feature that allows digital yuan payments through the app, with a single transaction limit of 2,000 yuan ($289).

Earlier this month, Singapore’s largest bank launched a new solution in China to enable its corporate clients to collect CBDC payments. Through the move, the bank seeks to help China’s local businesses to tackle the rising consumer usage and adoption of digital yuan.

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