William Quigley, one of the co-founders of Tether, expressed his skepticism about PayPal’s stablecoin ambitions, stating that he believes the company’s primary motivation is the potential cost savings on multicurrency transactions worth trillions of dollars. Quigley, who also invested in PayPal, does not anticipate significant innovation to come from the payments giant’s foray into stablecoins.
In an interview with CoinDesk, Quigley remarked, “I don’t think much innovation will come from PayPal. I think PayPal will see this principally as a cost-saving. They may or may not pass on a portion of that to their end users.”
While Tether (USDT) currently dominates the stablecoin market, followed by Circle’s USD Coin (USDC), PayPal’s extensive user base and global reach could potentially disrupt the stablecoin landscape.
Quigley, who left Tether in 2015, had invested in PayPal but no longer holds any of its stock. He revealed that PayPal had been exploring stablecoins for several years, primarily driven by the potential savings on multicurrency transactions conducted by millions of PayPal users worldwide.
The creation of a stablecoin involves PayPal purchasing a basket of currencies and holding them in banks across the globe. Once these currencies are tokenized, PayPal possesses a private, multicurrency money supply that operates independently of the traditional banking system, eliminating the need for third-party intermediaries.
Quigley explained that this allows PayPal to conduct transactions on its private blockchain, bypassing the Visa network and the banking system. As a result, there are no financial intermediaries involved, and no foreign exchange or interchange fees are incurred.
Regarding PayPal’s stablecoin network, Quigley outlined two potential approaches. PayPal could continue charging consumers and merchants currency conversion fees, even though it no longer incurs those fees, thereby retaining 100% of the fees as profit.
Alternatively, PayPal could eliminate currency conversion charges, reducing overall cross-border transaction costs for its customers.
Quigley also reflected on the growth of Tether, acknowledging that he did not anticipate the massive scale it has achieved. He initially viewed Tether as a charitable contribution to the open-source blockchain community, never expecting it to reach the staggering $50 billion in deposits it has amassed today.