Today in Crypto: At the World Economic Forum in Davos, Circle CEO Jeremy Allaire rejected claims that stablecoin yields could spark bank runs, a key crypto bill will likely be delayed as the US Senate prioritizes affordability, and former Alameda Research CEO Caroline Ellison was released from federal custody after 440 days.
“Totally absurd”: Circle CEO rejects bank-run fears over stablecoin yields
Circle CEO Jeremy Allaire dismissed concerns that interest payments on stablecoins pose a threat to banks.
Speaking Thursday at the World Economic Forum in Davos, Allaire described concerns that stablecoin yields could cause bank runs as “totally absurd,” citing historical precedents and existing reward-based financial services already in use.
“They help with stickiness, they help with customer traction,” Allaire said, adding that interest itself is not large enough to undermine monetary policy.
Allaire’s comments came amid heated debate over stablecoin yields, including in discussions over the US CLARITY Act, which aims to establish a federal market structure framework for digital assets.
Allaire pointed to government money market funds as a historical parallel, noting they faced similar warnings about draining bank deposits.
Yet it has been “around $11 trillion of dollar money market funds that grew in various different circumstances,” Allaire said, adding that this has not stopped lending.
“Meanwhile, lending is already shifting away from banks toward private credit and capital markets. In the US, much of GDP growth over multiple cycles has been funded through capital-market debt, not bank loans,” he said. “We want to build models for lending that build on top of stablecoins.”
Crypto bill may be delayed as Senate shifts to affordability: Report
Crypto market structure legislation could be delayed by weeks as the Senate Banking Committee is shifting focus to President Donald Trump’s affordability agenda, Bloomberg reported on Wednesday.
The committee is likely to switch focus to implementing Trump’s executive order barring Wall Street investors from buying single-family homes and delay advancing the crypto bill until late February or March.
It could be the Senate’s latest delay of the bill that aims to define how regulators will police crypto after the Banking and Agriculture Committees postponed markups for the legislation to garner bipartisan support.
Senate Agriculture Committee Republicans released their draft of the bill on Wednesday ahead of a markup of the bill scheduled for Tuesday next week, but it doesn’t have the support of the panel’s Democrats.
Republicans are pushing to get policy wins to take into the midterm elections in November, as polling and Polymarket odds show Democrats ahead with a chance of winning a majority in the House, which could derail Trump’s agenda.
Former Alameda CEO to be released from US custody after 440 days
Caroline Ellison, the former CEO of Alameda Research, is scheduled for release from federal custody after serving 440 days of a two-year sentence.
According to inmate records with the Federal Bureau of Prisons, Ellison is expected to be released from the Residential Reentry Management field office in New York City on Wednesday, more than a year after she reported to prison in Danbury, Connecticut.
The former Alameda CEO was one of three executives linked to the defunct cryptocurrency exchange FTX to serve prison time, along with former FTX CEO Sam “SBF” Bankman-Fried and former FTX Digital Markets co-CEO Ryan Salame.
After cryptocurrency exchange FTX collapsed in November 2022 amid reports of liquidity issues, Ellison, Bankman-Fried, Salame and executives Gary Wang and Nishad Singh were indicted on charges of fraud and money laundering. The Alameda CEO testified against Bankman-Fried at trial and accepted a plea deal for her cooperation, leading to a two-year sentence.
Ellison was initially scheduled to be released in February, which would still have been far short of her two-year sentence. However, many federal inmates are eligible for good-conduct credits. She was apparently also permitted to move to a reentry facility in October, serving her final months in custody in New York City.
Cointelegraph reached out to Ellison’s legal team, but a representative declined to comment.
