Major Banks Will Outshine Stablecoin Companies, Predicts Former Bitmex CEO
Arthur Hayes, former CEO of Bitmex and CIO of Maelstrom, believes that major banks like JPMorgan will surpass stablecoin companies such as Tether once they receive permission to issue fiat-backed stablecoins. Speaking on Laura Shin’s Unchained podcast, Hayes praised Tether’s successful business strategy of investing dollars in treasury bills to earn profits from the interest rate spread. This has allowed Tether to establish a significant presence in the crypto market. However, Hayes argues that the current model of centralized stablecoins relying heavily on banking services for custody and clearing is not sustainable.
Banks Could Replicate Tether’s Strategy
Hayes criticized bank managers for providing services to stablecoin firms like Tether but not capitalizing on the opportunity to issue their own stablecoins. He predicts that traditional banks, once authorized by the U.S. Treasury, could start issuing their fiat-backed stablecoins, replicating Tether’s interest-earning strategy and potentially overtaking existing stablecoin companies like Tether.
Legitimacy and Backing Give Banks an Advantage
Hayes suggests that stablecoins issued by banks would likely face fewer questions about legitimacy and backing, giving them a competitive edge over other stablecoin providers. This prediction comes as Tether reports a market capitalization of $91.5 billion and $4 billion in excess reserves at the end of 2023.
Hot Take: Major Banks Poised to Disrupt Stablecoin Market
Former Bitmex CEO Arthur Hayes predicts that major banks like JPMorgan will overshadow stablecoin companies once they are permitted to issue their own fiat-backed stablecoins. While Tether has achieved success with its investment strategy, Hayes argues that the current model of centralized stablecoins relying on banking services is not sustainable. He believes that banks could replicate Tether’s interest-earning strategy and gain a competitive advantage due to their legitimacy and backing. This prediction comes at a time when Tether reports a significant market capitalization and excess reserves, indicating potential disruption in the stablecoin market.
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