Tether and Circle are ‘money printing’ but competition will come: wormhole co-founder
Stablecoins giant such as Tether and Circle are in trouble from the current high-interest environment while Stablecoin holders are out of return, wormhole co-founder Dan Reecer, in the event of DAC 2025 of Mercado Bitcoin.
Speaking as a panelist, he said companies effectively “printing money” by maintaining yield from US wealth that supports their tokens. For example, Tether reported $ 4.9 billion on net profit In the second quarter of the year. That has seen the appreciation of the company to sink into a reported to be $ 500 billion In a new funding.
While interest rates remain elevated, Reecer suggested that it was only a matter of time before the users expect a portion of the harvest or move their funds elsewhere.
Platforms like M^0 and Agora have already responded to that request, he suggested. These projects allow stablecoin infrastructure to be built in such a way that routes yield to applications or directly to finish users, rather than the providers get it all.
“If I hold the USDC, I’m losing money, losing the money made by the circle,” Reecer said in the session, determining the cost of the opportunity holding unproductive tokens supported by the US ark -generating income.
Tether and Circle are unlikely to share the yield generated from their stablecoins directly with users as doing so can draw regulators. An alternative that continues to grow is the money market funds, allowing investors to gain exposure to the yield behind these stablecoins.
Round, worth remembering, got a hashnote Earlier this year for $ 1.3 billion, USYC’s tokenized Money Market Fund provided. In this acquisition, the circle is aimed at enabled to convert between cash and yield-bearing collateral to blockchains.
Currency market funds, however, are still a part of the Stablecoin market. According to Rwa.xyz Data, their market capitalization is currently standing around $ 7.3 billion, while the global Stablecoin market led to $ 290 billion.
Tether CoinDesk spokesman said “USDT’s role is clear: it’s a digital dollar, not an investment product.” He added that the “hundred -millions of people” rely on the USDT, especially in emerging markets, “which serves as a lifeline against inflation, bankruptcy, and capital controls.”
“While some percentage points can make a difference for wealthy Americans or European, the real savings for our USDT user base is the one against dramatic inflation that is common in developing countries-often reaching numbers as high as 50% to 90% year after year, with a denial of local amounts of money against US dollars in 70% year-year,” he said.
“Passing the yield is a start to change nature, stablecoin risk profile, and regulation treatment,” the spokesman added. “Competitors who experiment with stable-bearing with yield target a completely different audience, and they take additional risks.”
Fireblocks’ Stephen Richardson, during the panel, said the broader Stablecoin market temporarily emerged toward real-world use cases, including cross-border payments and FX services.
He said tokenized currency could immediately help solve problems that exist today, such as slow corporate payment metals or expensive remittances. Modern finances, added by Richardson, is already seen in the sector, with an example that has explored the money market funds used as collateral in exchanges.
