Circle CEO Jeremy Allaire believes there is significant potential for a yuan-backed stablecoin, even as China continues to restrict private digital currency initiatives and promote its own central bank digital currency.

Speaking in Hong Kong, Allaire said stablecoins could play a key role in expanding the global use of China’s currency by making cross-border payments faster and more efficient.

Stablecoins Could Help Internationalize the Yuan

Allaire argued that digital currencies offer a new pathway for countries to extend their financial influence globally.

He suggested that a yuan-backed stablecoin could help China “export” its currency more effectively, especially as digital payments become increasingly integrated into global trade and finance.

According to Allaire, China could potentially launch such a stablecoin within the next three to five years.

China Maintains Tight Control Over Digital Currency

Despite the opportunity, China has taken a strict stance against private stablecoins linked to the yuan.

In February, the People’s Bank of China, along with several government agencies, declared that unauthorized offshore issuance of yuan-pegged stablecoins would be treated as illegal financial activity.

Authorities have also imposed tighter controls on tokenization of real-world assets, citing concerns over financial stability, capital outflows, and monetary sovereignty.

These measures reinforce China’s preference for its own central bank digital currency, the e-CNY, as the primary vehicle for digital yuan adoption.

Digital Currency Competition Intensifies

Allaire’s comments highlight the growing geopolitical competition in digital finance, where countries are increasingly using technology to strengthen their monetary influence.

While China is focused on a state-controlled approach through its CBDC, stablecoins are gaining traction globally as flexible tools for payments and settlement.

This raises a broader question about whether countries can afford to limit private digital currency innovation while competing in a rapidly evolving financial system.

US Dollar Stablecoins Still Dominate

For now, US dollar-backed stablecoins continue to dominate the market.

Circle’s USDC, for example, grew 72% year over year to reach $75.3 billion in circulation by the end of 2025. Allaire noted that geopolitical events, such as the US-Iran conflict, have further increased demand for digital dollars as users seek stable and portable assets during times of uncertainty.

According to industry data, dollar-pegged stablecoins account for nearly all fiat-backed stablecoin supply, underscoring the US dollar’s continued dominance in the digital asset space.

China’s CBDC Strategy Remains Central

China has consistently reaffirmed its ban on crypto trading and mining since 2021, while doubling down on the development of the e-CNY.

Officials have indicated that they will continue to crack down on unauthorized stablecoin activity, positioning the digital yuan as the country’s preferred solution for modernizing payments and expanding its currency’s global reach.

French authorities are preparing additional measures to protect crypto investors amid a rising wave of kidnappings and so-called wrench attacks.

Speaking at Paris Blockchain Week, Jean-Didier Berger, minister delegate to the interior minister, said the government is already taking steps to address the growing threat and is working on a more comprehensive plan in the coming weeks alongside Interior Minister Laurent Nuñez.

Government Steps Up Prevention Efforts

Berger revealed that authorities have launched a prevention platform aimed at helping crypto holders better protect themselves. The initiative has already attracted thousands of users.

He described these efforts as part of a broader push to reduce incidents where criminals target individuals known to hold digital assets.

Latest Kidnapping Sparks Urgency

The comments come shortly after another high-profile case in France.

Earlier this week, a mother and her 11-year-old child were reportedly abducted in Burgundy by four suspects who demanded a €400,000 ransom from the father, a crypto entrepreneur. Authorities quickly intervened, arresting the suspects and safely freeing the victims.

The incident has added pressure on the government to respond more aggressively to the trend.

Sharp Rise in Wrench Attacks

France has become a hotspot for wrench attacks, where victims are threatened or physically harmed to force the transfer of crypto assets.

Since the start of 2026, there have been 41 reported crypto-related kidnappings in the country, averaging one incident every 2.5 days.

Globally, such attacks rose sharply in 2025. Data from CertiK shows a 75% increase, with 72 verified cases worldwide. France accounted for the highest number of incidents, with 19 confirmed cases, while Europe made up around 40% of the global total.

Crypto Holders Increasingly Targeted

Several recent incidents highlight the scale of the issue.

In March, a French couple in their late 50s lost approximately $1 million in Bitcoin after criminals posing as police officers robbed them.

In another case earlier this year, six individuals were arrested in connection with the kidnapping of a magistrate and her mother, targeting the magistrate’s partner, who is involved in the crypto sector.

Stronger Measures Expected Soon

With attacks becoming more frequent and organized, French authorities are expected to introduce stricter protective measures in the near future.

Berger indicated that the upcoming plan will go beyond prevention efforts, signaling a more serious and coordinated response to safeguard crypto investors.

South Korea is moving forward with plans to test blockchain-based payments for government spending, as part of a broader push to modernize its financial infrastructure.

The Ministry of Economy and Finance (MOEF) announced on Thursday that it has selected a pilot project using tokenized deposits to handle certain operational expenses, with a full rollout targeted for the fourth quarter of 2026.

Pilot Launch to Begin in Sejong City

The program will initially roll out in Sejong City, where authorities will test how tokenized deposits can be used for day-to-day government spending.

The pilot will include predefined conditions, such as limits on when funds can be used and what categories of expenses are allowed. This controlled setup is designed to evaluate how programmable money can function in real-world government operations.

What Are Tokenized Deposits?

Tokenized deposits are digital versions of traditional bank deposits issued on blockchain or distributed ledger technology.

Unlike stablecoins, these assets remain liabilities of regulated banks and operate within the existing financial system. This makes them more aligned with current regulatory frameworks while still benefiting from blockchain features like transparency and programmability.

Focus on Oversight and Efficiency

The initiative aims to improve how public funds are tracked and managed.

Currently, government operational expenses in South Korea are processed through credit and debit cards, with oversight relying on post-transaction reporting. By contrast, tokenized deposits can embed rules directly into the payment process, enabling real-time control over how funds are spent.

This could make government payments more transparent and reduce the risk of misuse.

Regulatory Sandbox to Guide Development

The pilot will run under a regulatory sandbox, allowing authorities to test the system while working closely with participating institutions.

The MOEF plans to use insights from the trial to refine the model and potentially introduce new legal and regulatory frameworks if the system proves effective.

The sandbox also allows tokenized deposits to be used for government spending despite existing rules that require such payments to go through official government cards.

Part of a Broader Digital Finance Strategy

This pilot builds on earlier initiatives. In March, South Korea announced a separate project using tokenized deposits to distribute subsidies for electric vehicle charging infrastructure.

At the time, the ministry revealed plans to transition up to 25% of treasury fund execution to digital currency systems by 2030.

The new pilot marks a step beyond subsidies, bringing tokenized payments into everyday government operations and signaling a broader shift toward blockchain-based public finance.