In a recent interview, one of the co-founders of Tether (USDT), William Quigley, has expressed doubt over the widespread acceptance of PayPal’s impending stablecoin. Quigley, also a co-founder of one of the world’s principal NFT networks WAX, conveyed that cryptocurrencies, including stablecoins, earn their credibility over time, with their performance across market cycles being a key determinants. This basically means that PayPal’s stabecoin, being a new entry to the crypto space, will have to gather steam before the crypto community fully embraces it.
Existing crypto users tend already to have one or two go-to stablecoins, and such predispositions could pose challenges to the entrance of PayPal’s stablecoin codenamed PYUSD. Remarkably, when one takes a look at the composition of the stablecoin market, Tether sits comfortably at the top as the largest and most liquid dollar-pegged token, with Circle’s USD Coin (USDC) trailing behind. Despite this, there are those who believe that PayPal, with over 420 million users globally, has the capacity to unsettle the stablecoin leaderboard.
If a significant fraction of PayPal’s user base endorses its stablecoin for low-fee transactions, then this could compel merchants to follow suit, expanding PYUSD’s mainstream adoption status. However, not without rising to several regulatory challenges, as pointed out by Quigley, and the recurring high compliance costs in the crypto market would persist as a major challenge to PayPal’s stablecoin.
In a 5-year span, Quigley envisions that we could be able to assess effectively the success of PayPal’s stablecoin, determining whether it managed to remain competitive in terms of fees with other stablecoin providers.
Quigley highlighted the importance of stablecoins referring to them as the bedrock of the crypto ecosystem, performing crucial functions in linking traditional finance and cryptocurrencies. Without stablecoins, it is projected that total trading volume and liquidity in the crypto market could plunge up to 75%.
As impressive as this may sound, the domain of tokenized fiat, captured in the form of stablecoins and Central Bank Digital Currencies (CBDCs) is likely to undergo a massive transformation. A staggering 98% of the global GDP represented by 130 countries, are presently exploring CBDC according to the Atlantic Council CBDC tracker, and if Quigley’s prediction holds any water, significant economies worldwide are likely to have tokenized their fiat in the coming years.
In conclusion, the primary unresolved issue is whether sovereign-issued stablecoins, in their ascendancy, would give room for privately issued stablecoins like Tether, to continue flourishing from a regulatory perspective.