Head of crypto firm Circle accepts ban in mainland China, but sees role for yuan-backed stablecoins

Circle co-founder and CEO Jeremy Allaire said Circle is encouraged by Hong Kong’s moves to regulate stablecoins, as Asia is its largest non-US market

He acknowledged that China is not likely to open up to cryptocurrencies, but said stablecoins could help Beijing in its goal of yuan internationalisation

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Jeremy Allaire, co-founder and CEO of the USDC stablecoin operator Circle, speaks at the Converge22 conference in San Francisco on September 30, 2022. Photo: Handout

Published: 9:00am, 11 Jul 2023Updated: 11:59am, 11 Jul 2023

Jeremy Allaire, co-founder and CEO of the USDC stablecoin operator Circle, said he is under no illusions about mainland China opening its markets to cryptocurrencies, but he remains optimistic about Web3 development in Hong Kong and the local monetary authority’s move towards regulating stablecoins.

“The reality is that every other major financial market in the world is also embracing digital assets, and the biggest financial institutions in the world are embracing digital assets. So for Hong Kong to be relevant, it has to,” Allaire said in an interview with the South China Morning Post on Friday, the final day of his two-week trip to Asia, which included an appearance at the World Economic Forum in Tianjin in late June.

“I think there is Chinese government support for that,” he added. “That’s different than feeling like it says something about opening up the trading of crypto on the mainland. I don’t think there’s anything there.”

While some government officials from mainland China, where cryptocurrencies are banned, have made statements in the past suggesting support for Hong Kong’s moves to court the industry, there has been no indication that Beijing itself is warming to crypto, as some have hoped. Allaire acknowledged this, but he said stablecoins – cryptoassets that are typically pegged to fiat currency – are unique in that they could offer a more immediate solution for the government’s goal to internationalise the yuan than the central bank digital currency (CBDC) eCNY.

“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.

Allaire referred to a stablecoin pegged to the offshore yuan (CNH) as an example of how this might work. Members of the team behind the stablecoin CNH Coin, which makes another pegged to the Hong Kong dollar called HKD Coin, were detained in Shanghai in May, according to Chinese media. Authorities have yet to give an explanation for the detention.

Stablecoins are the next front in Hong Kong’s bid to regulate crypto markets and become a global virtual asset hub.

A representation of a USD Coin stablecoin is depicted in this arranged photograph. Photo: Shutterstock Images