William Quigley, co-founder of Tether and an early PayPal investor, has expressed skepticism that the payments giant would provide significant new features to the stablecoin market.
According to the co-founder of Tether, Quigley, the potential savings on billions of dollars worth of multicurrency transactions is a major motivation for PayPal’s stablecoin goals.
Even if privately produced stablecoins are “a benefit to society in every respect,” according to Tether co-founder William Quigley, the introduction of PayPal’s PYUSD token is not expected to offer much innovation.
Tether (USDT) is the biggest and most liquid dollar-pegged cryptocurrency on the market, with Circle’s USD Coin (USDC) coming in second. PayPal’s access to hundreds of millions of wallets worldwide gives it the potential to disrupt the stablecoin leaderboard.
Former Tether employee and early Paypal investor Quigley sold his shares in the company. He claimed to be aware that PayPal has been researching stablecoins for the last eight years, with the company being motivated primarily by the savings that could be made on the many multicurrency transactions made by PayPal’s hundreds of millions of customers.
There is an overwhelming number of financial middlemen who charge fees for their services in the payments industry. For a stablecoin to be created, PayPal must first acquire a pool of fiat currency and store it in financial institutions throughout the globe. After tokenizing the currency backed by those bank deposits, PayPal will have a private, multicurrency money supply that is independent of the global financial system and does not need any third-party toll collectors, as outlined by Quigley.
Since PayPal currently holds both dollars and euros, it can settle transactions between customers in the two countries without using a banking institution.
According to Quigley, PayPal has two options for capitalizing on its new stablecoin network, given that it charges users and merchants 200 basis points and more when doing cross-border currency exchanges.
PayPal may keep charging its customers and merchants currency conversion fees even when it doesn’t have to and keep the whole cost as profit. It can either continue to charge its clients for currency conversion and increase the total cost of their cross-border transactions, or it may stop doing so.
As a result of interest-rate hikes in recent years, large stablecoin operators today, who keep tens of billions of dollars in items like U.S. Treasury notes, earn remarkable rates on their reserves, which is something Quigley acknowledges he didn’t see coming.
Also Read: Stablecoin supply falls below $125 billion as crypto assets continue to lose capital
