The digital currency will help the US dollar maintain its strength and support new infrastructure for transactions and exchanges, Jeremy Allaire, CEO and co-founder of Circle, told Yahoo Finance at the World Economic Forum in Davos, Switzerland.
“The competition over currencies in the future is a technological competition, not just a monetary policy competition,” Allaire explained. “The dollar is the world’s reserve currency, but the United States cannot take that for granted.”
Circle – the issuer of the stablecoin USD Coin (USDC-USD) pegged to the US dollar – is a major player in the $135 billion stablecoin market. USD Coin is the second largest stablecoin with a current market capitalization of over $25 billion, according to CoinGecko.
The company, which confidentially filed for an IPO last week, is building a platform that allows for near-instant settlement of low-cost global transactions and payments. The ability to use the US dollar more efficiently in cross-border transactions is one way the currency can continue to lead the pack globally.
“I think the opportunity at the international level is, you know, how can the digital dollar play a bigger and bigger role in humanitarian aid, and in the effective use of remittances and international transactions?” Aller said.
Despite rapid growth and broader adoption within the stablecoin market, the United States has yet to pass a regulatory structure for digital assets – a necessary next step for the digital dollar.
“There is a space race for digital currency, and the United States needs to put in place laws that allow digital dollars to flourish, and allow private industry and regulated private markets to grow,” Allaire explained.
Last year, the House Financial Services Committee passed the Stablecoin Payment Clarity Act, a bill that would create a regulatory framework for the digital asset class. But its progress was halted by Democratic opposition, which prevented Congress from considering the legislation.
While regulators have been slow to enact regulations for crypto assets, the SEC’s recent approval of a bitcoin spot trading fund has provided some clarity for investors and will likely attract billions more into the digital currency as a result. In a note to clients last week, Bernstein analyst Gautam Chugani wrote the decision “makes exposure to Bitcoin available” and will help drive “unprecedented” inflows into Bitcoin.
Chogani and his team estimate that the total crypto asset management industry will grow from $50 billion today to $650 billion by 2028.
Regarding whether the growing interest in digital assets, coupled with geopolitical shifts, could challenge the dominance of the US dollar, Allaire did not rule it out.
“(On) the question of whether a monetary commodity like gold or a digital commodity like bitcoin could play a bigger role as a store of value or a reserve asset, I’m open-minded about that. I think that can grow over time,” Allaire said.
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Sina Smith He is an anchor at Yahoo Finance. Follow Smith on Twitter/X @SeanaNSSmith. Advice on deals, mergers, activist positions, or anything else? Email seanasmith@yahooinc.com.
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