CEO Circle Called Banks’ Concerns About Yield-bearing Stablecoins Absurd
- Circle CEO Jeremy Allaire took part in the WEF.
- He commented on banks’ concerns about yield-bearing stablecoins.
- Allaire called them completely absurd, citing money market funds and financial products with built-in rewards as examples.
Circle CEO Jeremy Allaire called U.S. banks’ concerns about yield-bearing stablecoins “completely absurd.” He made the remarks during a panel discussion at the World Economic Forum in Davos.
In the summer of 2025, the U.S. House of Representatives passed the CLARITY framework bill. It introduces a classification of crypto assets, defines regulators’ powers, and sets requirements for counterparties. The bill was then sent to the Senate.
The Banking Committee and the Agriculture Committee must prepare their own versions. The latter recently released its draft. At the same time, the Banking Committee postponed consideration of the initiative.
One of the reasons is yield-bearing stablecoins. The banking lobby opposes legalizing a mechanism that pays rewards to asset holders, arguing that it would trigger capital outflows from deposits.
Allaire noted that in most other jurisdictions with a regulatory framework for stablecoins, such a mechanism is prohibited. This is because this type of crypto asset is positioned as a payment instrument.
But on the other hand, stablecoin issuers work with various partners, including crypto exchanges, which receive “rewards” from them for driving adoption and distribution of stablecoins.
Circle’s CEO explained it like this:
- financial products with built-in holder rewards already exist. Among other things, they help retain consumers
- similar arguments were heard from the banking lobby at the dawn of money market funds, but the collapse they predicted never happened.
Instead, lending shifted toward consumer credit. Here, Allaire quoted a participant in the money market fund sector, saying that so-called “junk” bonds issued by private lenders largely drove US GDP growth.
He and other panelists agreed that stablecoins and credit products built on them will not displace banking products, but will instead serve as a complement.
Allaire also debunked the audience’s concerns that lower transaction costs due to stablecoin adoption would lead to growth in the money supply. Circle’s CEO is convinced of the opposite. As an example, he cited the evolution of the internet.
Over the years, transmitting and storing data became cheaper. But that did not lead to a drop in its value or an increase in its quantity. In the same way, the mere existence of stablecoins does not make money cheaper, he believes, only reduces transaction costs.
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