Circle CEO Jeremy Allaire told Reuters on Thursday that a yuan-backed stablecoin represents a 'huge opportunity' for China as monetary competition shifts to blockchain infrastructure. Allaire predicted that China could launch a digital token backed by the yuan within three to five years, positioning stablecoins as a mechanism for countries to extend their currencies into global trade and payments.
USDC Surges 72% YoY, Geopolitical Tensions Boost Demand
Allaire noted that USDC, the second-largest stablecoin by circulation, grew 72% year-over-year to reach $75.3 billion in circulation by end of 2025. As of April 16, 2026, data from defillama.com shows USDC's market capitalization stands at $78.621 billion. He also revealed that Circle saw 'several billion dollars' of growth in USDC transaction volume following the outbreak of the US-Iran war, attributing this to demand for portable digital dollars during periods of heightened geopolitical risk.
Yuan Stablecoin: A New Chapter in China's Currency Internationalization
Allaire emphasized that stablecoins have become a tool for nations to compete in digital currency infrastructure. Although China banned crypto trading and mining in 2021 and is piloting the e-CNY digital yuan, a privately issued or regulated stablecoin could offer greater flexibility for offshore settlement. Reuters reported in August 2025 that China was considering yuan-backed stablecoins as part of its yuan internationalization strategy, with Ant Group and JD.com lobbying for approval. However, 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.'
Hong Kong as a Testbed, Circle Expands Regional Presence
The yuan currently represents about 2.9% of SWIFT payments, compared to the US dollar's 47%. A blockchain-based yuan instrument could reduce settlement friction in emerging markets and Belt and Road trade corridors. Allaire noted that Hong Kong, which has already granted stablecoin licenses to institutions like HSBC, is serving as a testing ground. Circle is actively exploring ways to integrate Hong Kong dollar stablecoins into global platforms. Circle's NYSE-listed shares (CRCL) rose about 1% in pre-market trading following the interview.
Tether Backs $134M Stablecoin Infrastructure Round
Separately, Tether participated in a $134 million funding round for Stablecoin Development Corporation, underscoring growing interest in stablecoin infrastructure. On the US regulatory front, Allaire commented on the CLARITY Act, which has raised questions about potential marketing restrictions on interest-bearing stablecoin products. He stated that any marketing limits would affect distributors more than issuers like Circle.