Published & Updated: January 23, 2026 | Tapbit Stablecoin & Institutional Desk
At Davos 2026, Circle CEO Jeremy Allaire dismissed major banks’ warnings that yield-bearing stablecoins could trigger a $6 trillion deposit flight from the traditional banking system as “totally absurd.” He argued that stablecoins like USDC complement rather than compete with banks, pointing to the coexistence of over $7–11 trillion in U.S. money market funds alongside bank deposits. USDC alone facilitated $9.6 trillion in on-chain volume in 2025 and $217 billion in redemptions, backed by transparent monthly attestations and partnerships with Global Systemically Important Banks (GSIBs). Allaire emphasized that yield-bearing stablecoins promote user loyalty at rates too low to disrupt monetary policy, while programmable money becomes essential for the emerging economy of billions of AI agents. With the GENIUS Act advancing stablecoin reforms and Circle’s new Arc Layer-1 testnet (100+ partners) targeting AI transactions, stablecoins are evolving into critical infrastructure for hybrid TradFi–crypto finance.
This guide analyzes Allaire’s Davos remarks, Circle’s strategic evolution, the AI agent opportunity, key comparisons, and how Tapbit traders can position for stablecoin growth in 2026.
Jeremy Allaire’s Davos 2026 Key Statements – Summary Table
| Topic | Allaire’s Position | Supporting Data / Context |
|---|---|---|
| Bank deposit flight fears | “Totally absurd” | $7–11T money market funds coexist safely with banks |
| Yield-bearing stablecoins | Enhance loyalty, no threat to stability | Rates too low to impact monetary policy |
| USDC scale | $9.6T on-chain volume (2025) | $217B redemptions, monthly attestations |
| AI agent economy | Stablecoins essential for billions of autonomous agents | No viable alternative for programmable payments |
| GENIUS Act | Political hurdles, not technical risks | Focus on issuer reforms, AML, yield limits |
| Arc Layer-1 | Testnet live, 100+ partners | Targets AI agent transactions & machine economy |
Why Allaire Calls Bank Fears “Totally Absurd”
Allaire directly countered Bank of America’s warning of a $6 trillion deposit flight by highlighting the parallel existence of money market funds (MMFs), which hold $7–11 trillion in assets without destabilizing banks. Key arguments:
- Yield-bearing stablecoins operate at very low rates → insufficient to trigger mass deposit shifts
- USDC promotes retention: users stay in the ecosystem for yield + programmability
- Coexistence model: stablecoins handle on-chain flows while banks retain fiat deposits
- Political narrative: opposition stems from legacy interests, not economic reality
Circle’s Strategic Evolution & 2025–2026 Metrics
- USDC on-chain volume: $9.6 trillion in 2025
- Redemptions: $217 billion (transparent reserves)
- Revenue: Q3 2025 $740M (+66% YoY) from reserve income
- Arc L1 testnet: 100+ partners, targeting AI agent payments
- EURC: MiCA-compliant growth in Europe
- Partnerships: GSIBs, tokenized credit markets
The AI Agent Economy: Why Stablecoins Are Essential
Allaire, CZ (Binance), and Novogratz (Galaxy) agree: billions of AI agents will require programmable, stable, instant payments. No traditional system can match stablecoins for autonomous machine-to-machine transactions. Circle positions USDC (and soon Arc-native tokens) as the default rail for this “machine economy,” enabling hybrid finance where code meets trust.
Key Comparisons: Traditional Banks vs Stablecoins
| Aspect | Traditional Banks | Stablecoins (USDC / Circle) |
|---|---|---|
| Assets Under Management | Deposits prone to runs | $7T+ MMFs coexist safely |
| Transparency | Opaque balance sheets | Monthly attestations & on-chain visibility |
| AI Readiness | Manual processes | Programmable on-chain payments |
| Growth Catalyst | Loans | Tokenized credit markets & AI agents |
Tapbit Trading Strategies Amid Stablecoin & AI Narrative Growth
- Create your Tapbit account (0% maker fees)
- Deposit USDT via P2P or card
- Spot accumulation: DCA USDC/USDT or ETH/USDT on dips (stablecoin growth proxy)
- Futures momentum: Long ETH/USDT perpetuals on GENIUS Act progress news (20–50x leverage, isolated margin)
- AI proxy play: Monitor AI-related tokens or ETH for agent economy upside
- Risk control: Max 1–2% account risk per trade; isolated margin + trailing stops
Conclusion
Circle CEO Jeremy Allaire’s Davos 2026 declaration that yield-bearing stablecoins pose “totally absurd” threat to banks underscores the growing coexistence narrative: USDC’s $9.6T on-chain volume and $217B redemptions prove stability, while $7–11T money market funds show parallel systems can thrive. With billions of AI agents requiring programmable payments, stablecoins are becoming essential infrastructure — especially via Circle’s Arc L1 (testnet live, 100+ partners) and MiCA-compliant EURC growth. The GENIUS Act’s reforms (yield limits, audits, freeze powers) and CLARITY Act debates represent political rather than technical hurdles.
Trade USDC, ETH & stablecoin narratives on Tapbit:
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Disclaimer: This article is for informational purposes only and does not constitute investment, financial, or regulatory advice. Stablecoins and cryptocurrency markets are highly volatile and subject to regulatory changes. Always conduct your own research (DYOR) and never invest more than you can afford to lose completely.
