Arthur Hayes, former CEO of Bitmex and CIO of Maelstrom, predicted that main banks like JPMorgan will overshadow Tether and different stablecoin corporations as soon as they’re permitted to challenge fiat-backed stablecoins.
Throughout an episode of Laura Shin’s Unchained podcast, Hayes outlined Tether’s profitable enterprise technique, which includes taking {dollars}, investing them in treasury payments, and incomes earnings from the rate of interest unfold. This mannequin has allowed Tether to realize vital standing within the crypto market, primarily as a result of absence of an identical providing from the U.S. banking system.
He highlighted that Tether homeowners generate substantial free money circulate yearly, estimating it to be round $4 or $5 billion.
Nonetheless, Hayes emphasised that the present operational mannequin of centralized stablecoins, which depends closely on banking providers for fund custody and clearing, isn’t sustainable.
He expressed his criticism of bank managers for offering these providers to stablecoin corporations like Tether however failing to capitalize on the chance to challenge their stablecoins.
Hayes predicted a shift within the stablecoin panorama, suggesting that conventional banks, as soon as permitted by the U.S. Treasury, might begin issuing their fiat-backed stablecoins. He believes that banks akin to JPMorgan might replicate the identical interest-earning technique presently employed by Tether, thereby cannibalizing the market share of present stablecoin corporations.
Hayes additional argued that the legitimacy and backing of stablecoins issued by these banks would seemingly go unquestioned, giving them a aggressive edge.
This prediction comes at a time when Tether, the corporate behind the USDT stablecoin, reported a market capitalization of $91.5 billion on the shut of 2023, together with $4 billion in extra reserves. Tether has been actively investing in a number of growth initiatives, as acknowledged by its CEO, Paolo Arduino.