Circle CEO Says Stablecoin Yield Will Not Weaken Banks

At the World Economic Forum in Davos, Circle CEO Jeremy Allaire addressed growing concerns around stablecoins and their role in the global financial system. Speaking plainly and with confidence, Allaire rejected the idea that interest payments on stablecoins could threaten banks or trigger bank runs. 

He said these fears are exaggerated and not backed by history. He believes stablecoins are simply a new step in financial services, not a threat to stability.

Circle CEO Highlighted Why Stablecoin Interest Is Not a Risk to Banks

At the conference, the industry leader dismissed claims that stablecoins could drain bank deposits, calling them “totally absurd.” 

Allaire explained that offering interest on stablecoins does not undermine banks or monetary policy. He said interest payments mainly help companies keep users and attract new customers. 

He compared this to reward programs already common in traditional finance. According to him, the size of these interest payments are too small to disrupt monetary policy. 

They are unlikely to trigger large withdrawals from banks. Allaire emphasized that financial history shows similar fears have surfaced before and proved unfounded.

Lessons From Money Market Funds

To support his view, Allaire pointed to US government money market funds. When these funds were first introduced, critics warned they would pull money away from banks and weaken lending. 

Despite those warnings, money market funds expanded to nearly $11 trillion in assets under management. This growth did not collapse the banking system or stop lending across the economy.

Allaire added that lending operations have already shifted over time. Today, private credit markets and capital markets fund a large share of economic growth, especially in the United States. 

Over multiple economic cycles, capital-market debt has played a larger role than traditional bank loans. Stablecoins, in his view, fit naturally into this broader trend.

Rather than replacing banks, Allaire said stablecoins open the door to new lending models. These models can sit on top of stablecoin infrastructure and support faster, more flexible financial services. 

The CEO stressed that innovation in finance should focus on expanding access and efficiency, not preserving outdated structures through fear-based regulation.

These comments come as lawmakers debate the US CLARITY Act, which seeks to define a federal framework for digital assets. The discussion around stablecoin yields has become a key issue in shaping future regulation.

AI as the Next Major Driver of Stablecoin Use

Allaire also highlighted artificial intelligence (AI) as a powerful force behind future stablecoin adoption. He said billions of AI agents will need a reliable and programmable payment system to operate at scale. 

According to him, stablecoins currently offer the only practical solution for this kind of automated, global payment activity. Other leaders at Davos shared similar views. 

Former Binance CEO Changpeng Zhao said crypto payments could become essential for AI-driven transactions. Galaxy Digital CEO Michael Novogratz previously echoed this belief, predicting that AI agents will become the largest users of stablecoins in the near future.