The intriguing revolution of stablecoins in the cryptocurrency sphere is one that continues to captivate individuals and corporations alike. Tether co-founder William Quigley recently shared his insights, highlighting that PayPal’s journey into stablecoin could be propelled by the potential savings on extensive multicurrency transactions. Quigley, a previous investor in PayPal, once considered Tether as “a charitable contribution to the open-source blockchain community.”
However, while he firmly believes that privately issued stablecoins offer remarkable societal benefits, he remains sceptical about the novelty PayPal is likely to introduce with their PYUSD token. His expectation leans towards PayPal primarily focusing on cost-saving with the possibility of transferring some of those savings to end users.
Stablecoin market has been dominated by Tether (USDT), the largest and most liquid of the dollar-pegged tokens, and Circle’s USD Coin (USDC). However, PayPal’s vast influence, accessed by millions globally, could cause ripples in the stablecoin hierarchy.
The explanation behind Quigley’s hypothesis regarding PayPal’s stablecoin outlook highlights the pervasive role financial intermediaries play in payment transactions. With the creation of stablecoin, PayPal takes possession of a diverse range of currencies, holds them across global banks, and tokenizes the currencies backed by these deposits. Consequently, PayPal creates an independent multicurrency store, free from charges imposed by third parties and beyond the global banking system.
This gives PayPal an edge when a transaction involves a consumer and a merchant dealing in different currencies; eliminating the need for external financial institutions. PayPal bypasses traditional banking systems, independently handling transactions on a private blockchain. The traditional foreign exchange or interchange fees are non-existent, sparing both parties unnecessary expenses and potentially boosting profits.
Quigley unfolded two possible pathways for PayPal; continue charging consumers and merchants currency exchange fees on each transaction despite the absence of such costs and retaining 100% of the fees as profit, or cancel the currency conversion charges previously levied on its customers, thus cutting down their overall transaction costs.
Though Quigley once viewed Tether as a benevolent contribution to the open-source blockchain community, he acknowledged the substantial yields earned by major stablecoin operators who hold billions in assets like U.S. Treasury bills. This potential income source, driven by increasing interest rates, was unanticipated. However, considering Tether’s enormous market cap of around $80 billion, as indicated by CoinMarketCap, the potential for earnings, and hence, competition, is undeniably present.
Source: Coindesk
