Crypto Pioneer William Quigley Skeptical About PayPal’s Impact on Stablecoin Innovation
Crypto News – William Quigley, a key figure in the early days of Tether and an early investor in PayPal, expressed skepticism about PayPal’s potential to drive significant innovation in the stablecoin market.
Quigley emphasized his belief in the societal benefits of privately issued stablecoins but doubted that PayPal’s recent introduction of PYUSD token would introduce groundbreaking advancements.
“I don’t anticipate significant innovation from PayPal,” Quigley stated in an interview with CoinDesk. “I believe PayPal views this primarily as a cost-saving measure, and whether they pass on the benefits to their end users remains uncertain.”
Tether (USDT) currently dominates the stablecoin market as the largest and most liquid dollar-pegged token, followed by Circle’s USD Coin (USDC). However, given PayPal’s extensive user base of hundreds of millions globally, there is potential for PayPal to disrupt the stablecoin landscape.
Quigley, who parted ways with Tether in 2015, was an early investor in PayPal, though he no longer holds any stock in the company. He mentioned being aware of PayPal’s interest in stablecoins for nearly a decade, primarily driven by the potential cost savings in processing multicurrency transactions for its vast user base.
He explained the process of creating a stablecoin, where PayPal acquires a mix of currencies and holds them in various banks worldwide. By tokenizing these currencies based on the bank deposits, PayPal creates a private, multicurrency money supply detached from the traditional global banking system, free from third-party toll collectors.
Quigley illustrated that this approach allows for seamless transactions, such as an American consumer purchasing from a German merchant, without requiring financial institutions for currency exchange, as PayPal already possesses both currencies.
He emphasized that all transactions occur on PayPal’s private blockchain outside traditional networks, eliminating financial intermediaries and associated fees. PayPal can either retain the currency conversion fees as profit or pass the cost savings to consumers and merchants, reducing overall cross-border transaction expenses.
In conclusion, while stablecoin operators like Tether and USD Coin currently hold significant reserves in U.S. Treasury bills, generating notable yields due to interest rate increases in recent years, Quigley admitted he hadn’t foreseen this potential when he co-founded Tether, considering it a charitable contribution to the open-source blockchain community at the time. The scale and growth of stablecoins like Tether to $50 billion in reserves exceeded his initial expectations.