Circle CEO Jeremy Allaire expressed the belief that stablecoins could play a crucial role in the expansion of China's digital yuan, despite the country's ban on decentralised cryptos. Allaire, whose company is behind the popular USD Coin (USDC) stablecoin, stated that a yuan-based stablecoin might be China's best bet for driving the adoption of its national currency.
While China has been actively cracking down on the use of cryptos, it has simultaneously been spearheading the development and testing of its Central Bank Digital Currency (CBDC), the digital yuan. As of January 2023, the Chinese government reported that approximately 13 billion digital yuan are already in circulation.
Interestingly, the digital yuan's official website asserts that the currency will replace stablecoins like Tether (USDT) and others while clarifying that the CBDC itself is not a stablecoin. The website allows users to exchange cryptos for digital yuan using MetaMask or the platform's conversion portal.
Allaire acknowledged that China is unlikely to embrace decentralised cryptos. However, he noted that Hong Kong's progressive stance towards the crypto sector could indicate some subversive support from the mainland.
The Circle CEO also highlighted the positive trend of governments and central banks worldwide developing CBDCs using modern distributed ledger technology, which moves away from legacy systems. However, he emphasised that this shift should not be misconstrued as acceptance of decentralised and self-sovereign systems.
Despite China's strict regulations, the digital yuan has begun making its way across borders. For instance, DBS, a cryptocurrency-friendly bank based in Singapore, has developed a digital yuan merchant solution that enables Chinese businesses to receive payments in the CBDC. The service allows mainland China-based clients to receive digital yuan and settle directly to their yuan-denominated bank accounts.
As China continues to explore the potential of its digital yuan CBDC, the incorporation of stablecoins could provide an additional avenue for promoting the adoption of its national currency globally.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash