Jeremy Allaire, CEO of Circle, told Reuters on Thursday that a yuan-backed stablecoin represents a 'huge opportunity' for China as monetary competition shifts to blockchain infrastructure. He predicted China could launch such a digital token within three to five years.
Allaire, speaking in Hong Kong, argued that stablecoins have become a mechanism for countries to extend their currencies into global trade and payments. 'If there is currency competition, you want your currency to have the best features possible. This is becoming a technology competition,' he said. The comments carry weight given Circle's market position: the Boston-based firm issues USDC, the second-largest stablecoin by circulation.
USDC Growth and Geopolitical Catalysts
USDC grew 72% year-over-year to $75.3 billion in circulation by the end of 2025. As of April 16, 2026, DefiLlama data shows USDC's market capitalization stands at $78.621 billion. Allaire also noted that Circle recorded 'several billion dollars' in USDC transaction growth following the outbreak of the U.S.-Iran war, attributing the surge to demand for portable digital dollars during periods of heightened geopolitical risk.
China's Evolving Stance on Stablecoins
China banned cryptocurrency trading and mining in 2021, citing financial stability concerns, but has pushed a state-controlled alternative through its e-CNY digital yuan pilot. However, Allaire suggests a private or regulated stablecoin could offer more flexibility for offshore trade settlement. In August 2025, Reuters reported, citing sources, that China was considering yuan-backed stablecoins as part of a yuan internationalization strategy, with tech firms like Ant Group and JD.com pushing for approval. In February 2026, the People's Bank of China (PBOC) moved to ban unregulated offshore issuance of yuan-pegged tokens, stating such instruments 'perform some functions of legal tender.'
Yuan Internationalization Meets Blockchain
The yuan currently accounts for about 2.9% of SWIFT payments, while the U.S. dollar holds roughly 47%. A blockchain-native yuan instrument could theoretically reduce friction in yuan settlement in emerging markets and Belt and Road Initiative trade corridors without requiring full currency convertibility. Hong Kong is serving as a testing ground: Allaire said the city has already issued stablecoin licenses to institutions like HSBC, and Circle is actively exploring ways to integrate Hong Kong dollar stablecoins into global platforms. Circle's stock (NYSE: CRCL) rose about 1% in pre-market trading following the Reuters interview.
Tether Bets on Stablecoin Infrastructure
Tether has joined a $134 million funding round for Stablecoin Development Corporation, highlighting growing interest in stablecoin infrastructure. On the U.S. regulatory front, Allaire commented on the CLARITY Act, suggesting any marketing restrictions on interest-bearing stablecoin products would affect distributors more than issuers like Circle. Whether or not China moves forward with a yuan-pegged token, the architecture for digital currency competition is already in motion.