Circle CEO Dismisses Banking Sector’s Stablecoin Concerns as ’Totally Absurd’

Jeremy Allaire, CEO of stablecoin issuer Circle, has openly criticized the banking industry's apprehensions regarding interest payments on stablecoins. Speaking at the World Economic Forum in Davos, Allaire labeled the fear of deposit flight as "totally absurd," arguing that such concerns have historically emerged with the introduction of new financial products like government money market funds.

The banking sector has raised alarms over stablecoin rewards, claiming they could distort market dynamics and hinder credit creation. In the U.S., banks have particularly targeted the GENIUS Act, citing potential risks to the financial system. Allaire countered these arguments, emphasizing the practical and historical precedent of similar financial innovations.

Bank of America CEO Brian Moynihan recently likened stablecoins to money market mutual funds, which require reserves in short-term instruments like U.S. Treasuries, thereby reducing systemic lending capacity. Allaire's rebuttal underscores the ongoing tension between traditional financial institutions and the burgeoning digital asset ecosystem.