China has long since closed its doors to decentralized cryptocurrencies, but Circle CEO Jeremy Allaire believes that stablecoins could play a role in the proliferation of China’s digital yuan.
Allaire, who heads up the issuer of dollar-backed stablecoin USD Coin (USDC), suggested that a renminbi (RMB) based stablecoin might be China’s best bet of driving adoption of its national currency in an interview with the South China Morning post.
“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 (CBDC).”
China cracked down on the use of cryptocurrencies from 2021 while simultaneously blazing the trail for the trial, testing and issuing of its Digital Yuan CBDC (e-CNY). As of Jan. 2023, the Chinese government noted that some 13 billion e-CNY were in circulation.
Interestingly, the digital yuan website claims that e-CNY “will replace” the dollar, USDT and all other stablecoins while stipulating that the CBDC will not be a stablecoin. The website offers users the ability to exchange cryptocurrency to e-CNY through MetaMask Swap or its own conversion portal.
Related: Hong Kong’s regulatory lead sets it up to be major crypto hub
Allaire conceded that China is unlikely to warm towards the use of decentralized cryptocurrencies, while stating that Hong Kong’s progressive attitude towards the crypto sector could signal subversive support from the mainland.
The Circle CEO also noted that moves by various governments and central banks around the world to develop CBDCs that move away from “legacy technology into more modern distributed ledger technology” was positive, but it should not be misconstrued as a move towards accepting decentralized and self-sovereign systems:
“There’s a whole bunch of things that are useful from that, but I view that as very different from the work that the private sector does to innovate on the public internet.”
Nevertheless, the digital yuan is finding its way across Chinese borders. As Cointelegraph previously reported, Singapore-based, cryptocurrency-friendly bank DBS has developed an e-CNY merchant solution allowing Chinese businesses to receive payments in the CBDC.
The service allows clients based in mainland China to receive or collect e-CNY and have settlements made directly to renminbi-based bank accounts.
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