Jeremy Allaire, CEO of the publicly listed stablecoin issuer Circle, said interest payments on stablecoins do not pose a threat to banks.
Speaking Thursday at the World Economic Forum in Davos, Allaire described concerns that stablecoin yields could cause bank runs as “totally absurd,” citing historical precedents and existing reward-based financial services already in use.
“They help with stickiness, they help with customer traction,” Allaire said, adding that interest itself is not large enough to undermine monetary policy.
Allaire’s comments came amid heated debate over stablecoin yields, including in discussions over the US CLARITY Act, which aims to establish a federal market structure framework for digital assets.
Allaire points to money market funds as a historical parallel
Allaire pointed to government money market funds as a historical parallel, noting they faced similar warnings about draining bank deposits.
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.
Circle CEO Jeremy Allaire at the WEF panel on Thursday. Source: WEF
“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
Allaire also highlighted artificial intelligence as a major driver of future stablecoin adoption.
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.”
Former Binance CEO Changpeng Zhao. Source: YZi Labs
Related: US Senate Agriculture Committee to release updated market structure bill
Similar views were echoed elsewhere at the forum. Former Binance CEO Changpeng Zhao said Thursday at Davos that crypto payments could be essential for AI-driven transactions.
In September, Galaxy Digital CEO Michael Novogratz predicted that AI agents will become the biggest stablecoin user “sometime in the near distant future.”
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