Arthur Hayes expects banking giant to surpass Tether for stablecoin dominance
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Arthur Hayes, former CEO of Bitmex and CIO of Maelstrom, predicts that once major banks such as JPMorgan Chase are allowed to issue fiat-backed stablecoins, they will overshadow Tether and other stablecoin companies.
In an episode of Laura Shin’s Unchained podcast, Hayes outlined Tether’s successful business strategy, which involves acquiring U.S. dollars, investing them in Treasury bills, and earning profits from the interest rate differential. This model has allowed Tether to achieve a significant position in the cryptocurrency market, largely due to the lack of similar products in the U.S. banking system.
He emphasized that Tether owners generate significant free cash flow annually, estimated at around $4 to $5 billion.
However, Hayes emphasized that the current operating model of centralized stablecoins that rely heavily on banking services for fund custody and clearing is unsustainable.
He criticized bank managers for providing these services to stablecoin companies such as Tether but failing to take advantage of the opportunity to issue stablecoins.
Hayes predicted a change in the stablecoin landscape, suggesting that traditional banks could begin issuing fiat-backed stablecoins once they receive permission from the U.S. Treasury Department. He believes that banks such as JPMorgan Chase can copy the same interest-generating strategy currently employed by Tether, thereby cannibalizing the market share of existing stablecoin companies.
Hayes further believes that the legitimacy and support of stablecoins issued by these banks may be unquestionable, giving them a competitive advantage.
The prediction comes as Tether, the company behind the USDT stablecoin, reported a market capitalization of $91.5 billion at the end of 2023 and $4 billion in excess reserves. As its CEO Paolo Arduino said, Tether has been actively investing in multiple expansion plans.
