Why USDT is the Best Stablecoin | Paul & Zaheer

Transcript

I think that you're right. You're going to see more issuance of new stable coins than less, right? It's going to be like worse before it gets better kind of thing. Um, but I think the world, as everyone knows, and their bones, right? Like, so, so this is the kind of like calculus. This is going to be a bit of a long-winded answer. So, um, going to preface this, but this is going to be the kind of calculus for most financial institutions. It's like, oh my god, Tether makes x amount of dollars. Why don't we do this? We have a balance sheet. We could do this, right? And we could take it down. But again it goes back to the original point which is they don't understand why tether is the best you know stable coin that tether does not service you know if you think about

it from the you know yield perspective which a lot of stable coins go and try to attract right nobody cares to get the yield right billions of dollars you know there's there's since the election there've been something like $30 billion in new stable coin issuance on tether right that's another $30 billion that's saying I don't care about the yield just give me the best most liquid product that is always available able and I can have it in my local jurisdiction and people will forego whatever yield they can get on that you know same amount of dollars right so so that's kind of point number one right people are are the stable coin issuers of today especially the new ones are kind of popping up they don't really understand the fundamental reason why tether is winning which is tether is much more of a replacement of

the the euro dollar system broadly than it is anything else right it is creating the ability to have dollars offshore while the American government is very happy right subliminally um without actually needing to kind of go in and intervene and then the other you know to take the other side of the argument right which is you know okay then let's look at the domestic stable coin issuer and circle right circle you know business is fundamentally different like after we saw the perspectives for the S1 we realized very quickly as an industry I mean we knew this right but uh you know as an industry that circle is not a great business right it's not like tether these two are not the same at all right um number one they give away almost the overwhelming majority of their revenue for their largest partner

which is Coinbase and they'll have to do this for every single new kind of uh you know fintech company or bank that they want to work with because obviously you did it for one you can do it for all of the rest right if it's Coinbase has the bargaining chips then Binance is going to do the same thing right and then so on and so forth so you know circle's game is very much flood the market with the with the supply of USDC and pray to God that like you know once the the the velocity gets to a trillion plus, right? That then maybe it'll be, you know, the the law of large numbers gets so insane that like you'll still make some money.

Um, funny enough, they pulled their their IPO a few days ago. Obviously, probably more related to tariffs and than anything else, but still, you know, it wasn't met with a ton of, you know, uh, positive reception, whereas Tether, a private company, that's is is very much moving in the right direction and and kind of hitting a lot of traction within the US, right? And you saw this with the outcry of of you know kind of uh the circle team really pushing Tether to uh you know kind of get eliminated from any sort of stable coin regulation by banning foreign issuers. America is not dumb thankfully as a as a as a legislative body broadly speaking. Um and and really they understand that you need a sort of you know offshore dollar system to exist. you just want to bring

them into the fold just enough to where you have purview, but you don't want to, you know, kind of fully meddle in that system. This is also why tethers existed for so long, right? Um, you're not going to have, you know, a hundred billion dollar plus uh, you know, uh, stable coin exists or or dollar system exists without, you know, obviously the government knowing knowing about its existence, right? Um I think you know these these two things are are are really critical in terms of the the kind of ongoing uh you know push and and I think you know Paulo gave an interview I think to Forbes I don't know when it was but the the article released today right uh in which he highlights you know it's like he could have a bunch of you know and I really appreciate his insights because obviously he's running the best

fund but he could have a bunch of different opinions he could give out the yield he could do this and that and you know I'm sure he's thought about all of these different approaches but he kind of has always harp the same thing which is people just want stability in their dollars right people want to know that my you know dollar will exist tomorrow in the same way that it existed today and that it's going to be good anywhere in the world that I go and and and want you know and and can transact in that right they don't want you know a store of value that's what Bitcoin is for right in terms of you know having like a sort of hedge against inflation they want you know digital dollar so they can go and and and uh you know spend that money basically right So I think this is

the the kind of fine line that that you know people like they get too cute with it. They try to put everything into one package, right? But they don't understand fundamentally the reason why Tether, you know, is doing so well and why it's kind of the only game in town in a way and and will probably be the the largest winner across the next number of years, right? Um with really, you know, the competitors kind of dying out fundamentally hinges on the fact that you're not going to have 50 additions of the same dollar, right? you're not going to have 50 different you this is why banks don't haven't ever issued their own currency in the past they actually did this so this more than 100 years ago in the US you know different banks issued their own currency until the practice was standardized across the board right so

people realized very quickly that it was a bad idea to have different people issue different types of dollars right the same thing will happen here you know that's going to fundamentally you know happen what does that look like does it look like tether plus government or something like this maybe but it's going to be very hard to replace the global source of USCT.