Arguing that privately distributed stablecoins “benefit society in every aspect”, William Quigley, one of the co-founders of Tether, said that PayPal’s PYUSD token is unlikely to bring innovation to the industry. Currently leading the stablecoin market, tether (USDT) is the most liquid dollar-pegged token. Tether is followed by Circle’s USDC. Although this is the case for now, PayPal, which has access to hundreds of millions of wallets around the world, is expected to shake this leaderboard.
Quigley, who left Tether in 2015, was an early investor in PayPal, although he no longer holds any of its shares. Quigley reports that the company has been interested in the stablecoin industry for 7-8 years and adds that this interest is related to the potential savings it provides in transactions using more than two currencies. The investor explains:
“All transactions now occur on the private blockchain outside the Visa network and banking system. There are no financial intermediaries anymore, only PayPal. Since no real currency is exchanged, there is no third-party FX broker taking margin. Just one token is exchanged for another token. There are no transaction fees either.
Even if PayPal is no longer subject to these fees, it can still charge fees on every transaction and keep all of those fees in the company treasury as profit. However, it could eliminate all these fees that customers have been paying so far and reduce cross-border transaction costs overall.”
Today, major stablecoin operators holding tens of billions of dollars in places like U.S. Treasury bonds are earning impressive returns on those reserves, thanks to interest rate increases in recent years. Quigley, one of the potential winners in the industry, also admits that he cannot make any predictions about the future.
When we first started the Tether business, we did so to contribute to the community of an open source blockchain. Interest rates were zero back then, and of course we never thought we’d reach $50 billion.