April 19, 2024
Altcoins News

Stablecoins Play Key Role in China’s CBDC Adoption, Believes Circle CEO Jeremey Allaire

Circle CEO Jeremy Allaire believes that stablecoins could contribute to the adoption of China’s digital yuan, despite China’s restrictions on decentralized cryptocurrencies. In an interview with the South China Morning Post, Allaire, who leads the company responsible for the United States dollar-backed stablecoin USD Coin (USDC), suggested that a stablecoin based on the yuan could be an effective means for China to promote its national currency internationally. He stated, “If eventually, the Chinese government wants to see the RMB [yuan] 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.”

While China has taken measures to suppress the use of cryptocurrencies in 2021 and has introduced its own central bank digital currency (CBDC), the digital yuan, Allaire noted that the Chinese government aims to replace decentralized stablecoins such as Tether (USDT) with its CBDC. However, he acknowledged that China is unlikely to embrace decentralized cryptocurrencies and speculated that Hong Kong’s progressive approach to the crypto sector might indicate some covert support from the mainland.

Allaire also acknowledged the positive trend among governments and central banks worldwide in developing CBDCs using distributed ledger technology. However, he emphasized that this should not be misconstrued as acceptance of decentralized and self-sovereign systems, stating, “There’s a whole bunch of things that are useful from that, but I view that as very different from the work that the private sector does to innovate on the public internet.”

Despite China’s restrictions on decentralized cryptocurrencies, the digital yuan is making its way beyond Chinese borders. DBS, a cryptocurrency-friendly bank based in Singapore, has created a digital yuan merchant solution enabling Chinese businesses to receive payments in the CBDC. This service allows mainland Chinese clients to receive digital yuan and directly settle funds into their yuan-denominated bank accounts.

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