Tether Co-Founder Assesses PayPal's Aspirations in the Stablecoin Space

William Quigley, one of the co-founders of Tether, expressed his belief that privately issued stablecoins provide substantial societal benefits.

However, he remains sceptical about the potential for significant innovation stemming from PayPal's recent introduction of the PYUSD token. William Quigley, one of the co-founders of Tether, expressed his belief that privately issued stablecoins provide substantial societal benefits.

However, he remains sceptical about the potential for significant innovation stemming from PayPal's recent introduction of the PYUSD token. While Tether (USDT) currently reigns supreme as the largest and most liquid dollar-pegged token in the stablecoin market, followed closely by Circle's USD Coin (USDC), there is speculation about PayPal's potential to disrupt this status quo. 

Tether Co-Founder Sizes Up PayPal’s Stablecoin Ambitions

The payments industry is characterized by numerous financial intermediaries, each taking a cut for their services. To create a stablecoin, PayPal would need to purchase a mix of currencies and maintain deposits in various banks worldwide, encompassing yen, euros, rupees, won, and more.

After tokenizing these currencies with the backing of these bank deposits, PayPal would essentially possess a private, multicurrency monetary supply that operates independently of the global banking system and is devoid of any fees imposed by third-party intermediaries, as explained by Quigley.

Quigley, who departed from Tether in 2015, also noted that he had been an early investor in PayPal, although he no longer holds any of the company's stock. He mentioned that he was aware of PayPal's exploration of stablecoins for approximately seven or eight years, primarily driven by the potential cost savings associated with the multitude of multicurrency transactions conducted by hundreds of millions of PayPal users.

“All transactions are now done on its private blockchain outside of the Visa network and the banking system,” Quigley said. “There are no financial intermediaries anymore – just PayPal. There is no third-party FX intermediary taking margin because the real currency is not being swapped. It’s just one token being exchanged for another. There’s no FX or interchange fee.”

Quigley suggested that PayPal, which currently imposes fees of 200 basis points or more on consumers and merchants for currency conversions in cross-border transactions, has two potential avenues for leveraging its newly established stablecoin network.

“PayPal can continue to assess consumers' and merchants' currency conversion fees on each transaction even though it no longer incurs those fees, and retains 100% of those fees as profit. Or, it can eliminate the currency conversion charges it has heretofore assessed its customers and lower their overall cross-border transaction costs,” he said.

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