By Michael Scott
Despite China banning the utilization of cryptocurrencies, stablecoins may have a significant role in its national currency’s growth.
Jeremy Allaire believes that stablecoins might be crucial in the digital yuan’s growth despite the nation shutting its doors to decentralized cryptocurrencies.
Yuan-backed Stablecoin to Unleash China Digital Potential
Currently, Allaire heads up the organization behind USD Coin, the stablecoin backed by the U.S. Via an interview with South China Morning Post, he proposed that a yuan-founded stablecoin may be the nation’s best option for enhancing its national currency adoption.
If the government of China wants to witness a situation where the RMB (yuan) is utilized more freely across the globe for commerce and trade, stablecoins would be a better option than the central bank digital currency (CBDC).
China Crackdown on Cryptocurrency Ongoing
In 2021, China cracked down on cryptocurrency utilization while concurrently advocating for the trial, testing, and provision of its digital CBDC. By January 2023, the nation’s government established the circulation of 13 billion yuan.
Remarkably, the digital yuan website claims that the currency will be the dollar’s, Tether’s, and other stablecoin’s replacement. It also specifies that the CBDC will not be a stablecoin. Via MetaMask or its conversion portal, the website permits cryptocurrency exchange for digital yuan.
Mainland China Watching Hong Kong Milestone in Digital Industry
Allaire acknowledged China’s unlikelihood to embrace decentralized cryptocurrencies. He also claimed that the progressive outlook of Hong Kong towards the crypto sector could lead to the mainland providing rebellious support.
The circle’s chief executive officer also revealed that the implementation of interventions by several central banks and governments across the globe to create CBDCs that shift from legacy technology into more present distributed ledger technology was appropriate.
However, this should not be misinterpreted as an initiative toward embracing decentralized and independent systems. The CEO also claims that despite being useful, he considers them different from the private sector’s input towards innovation on the public internet.
Digital Yuan Realizing Usage Beyond China’ Borders
However, the digital yuan is extending beyond China’s borders. Previous reports reveal that DBS, a Singapore-founded cryptocurrency-friendly bank, has created a digital yuan merchant solution to allow Chinese firms to receive payments in the central bank digital currency.
This service permits the collection or receipt of digital yuan by customers based in mainland China. Additionally, it allows the direct payment of settlement to yuan-founded accounts.