Circle's Allaire Dismisses 'Absurd' Concerns About Stablecoin Yields Triggering Banking Crisis
Circle's chief executive Jeremy Allaire dismissed suggestions that yields on stablecoins might trigger bank runs during his appearance at the World Economic Forum, drawing comparisons to money market funds and evolving financial systems.
The chief executive of Circle, Jeremy Allaire, whose company is a publicly traded stablecoin issuer, has stated that paying interest on stablecoins presents no danger to the banking sector.
During his Thursday appearance at the World Economic Forum in Davos, Allaire characterized worries that yields on stablecoins might trigger bank runs as "totally absurd," referencing historical examples and reward-based financial products that currently exist in the marketplace.
"They help with stickiness, they help with customer traction," Allaire said, adding that interest itself is not large enough to undermine monetary policy.
The remarks from Allaire emerged during ongoing controversy surrounding yields on stablecoins, including within conversations about the US CLARITY Act, legislation designed to create a federal market structure framework for digital assets.
Allaire points to money market funds as a historical parallel
Drawing a historical comparison, Allaire referenced government money market funds, which encountered comparable concerns about depleting deposits from banks.
Yet it has been "around $11 trillion of dollar money market funds that grew in various different circumstances," Allaire said, adding that this has not stopped lending.
"Meanwhile, lending is already shifting away from banks toward private credit and capital markets. In the US, much of GDP growth over multiple cycles has been funded through capital-market debt, not bank loans," he said. "We want to build models for lending that build on top of stablecoins."
Circle CEO says stablecoins are the only viable money for AI agents
Artificial intelligence emerged as another key theme in Allaire's discussion, which he identified as a significant catalyst for stablecoin adoption in the coming years.
He said "billions of AI agents" will need a payment system, adding that "there is no other alternative other than stablecoins to do that right now."
Comparable perspectives were voiced by other participants at the forum. Changpeng Zhao, the former CEO of Binance, stated Thursday at Davos that cryptocurrency payments may prove vital for transactions powered by artificial intelligence.
In September, Galaxy Digital CEO Michael Novogratz predicted that AI agents will become the biggest stablecoin user "sometime in the near distant future."