Circle CEO Jeremy Allaire breaks down mystery of stablecoin yield

Episode 40 of Season 4 of The Scoop was recorded with The Block’s Frank Chaparro and Jeremy Allaire, Co-Founder & CEO of Circle.

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This special bonus episode of The Scoop was recorded live at the Crypto Bahamas conference with Jeremy Allaire, CEO of Circle, the digital payments and infrastructure company behind the popular stablecoin USDC.

As data from The Block shows, USDC is the second-largest stablecoin by market capitalization, and its share of the total stablecoin supply has been steadily on the rise.

According to Allaire, a primary driver of demand for stablecoins comes from crypto native businesses:

“Basically any business that operates in the crypto economy wants to use stablecoins as working capital. Well, these are businesses that also have borrowing needs, these are businesses that want to borrow, and so you want to borrow stablecoins — so there's inherent demand to borrow in that medium of exchange.”

It is this demand for stablecoins that creates lucrative yield opportunities for stablecoin lenders in crypto, in the same way that lenders in the world of traditional finance profit from the interest on the money they lend.

As Allaire explains, stablecoin borrowers are willing to pay to borrow capital:

“Banks get 17 or 20% from consumers for lending the money for credit cards, right? So people pay an interest rate to borrow. Working capital of crypto is stablecoins, there's businesses that want to borrow it, and there you go.”

During this bonus episode, Chaparro and Allaire also discuss:

  • Yield bearing products and US securities law
  • “Centralized” vs decentralized stablecoins
  • The future of stablecoins

This episode is brought to you by our sponsors FireblocksCoinbase Prime & Cross River
Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves over 725 financial institutions, has secured the transfer of over $1.5 trillion in digital assets, and has a unique insurance policy that covers assets in storage & transit. For more information, please visit www.fireblocks.com.

About Coinbase Prime
Coinbase Prime is an integrated solution that provides institutional investors with an advanced trading platform, secure custody, and prime services to manage all their crypto assets in one place. Coinbase Prime fully integrates crypto trading and custody on a single platform, and gives clients the best all-in pricing in their network using their proprietary Smart Order Router and algorithmic execution. For more information, visit www.coinbase.com/prime.

About Cross River
Cross River is powering today’s most innovative crypto companies, with banking and payments solutions you can rely on, including fiat on/off ramp solutions. Whether you are a crypto exchange, NFT marketplace, or wallet, Cross River’s API-based, all-in-one platform enables banking as a service, ACH & wire transfers, push-to-card disbursements, real-time payments, and virtual accounts and subledgers. Request your fiat on/off ramp solution now at crossriver.com/crypto.


© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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