The Future of Tether and Centralized Stablecoins: Arthur Hayes’ Warning

Arthur Hayes Predicts Banks Will Replace Tether and Other Stablecoin Companies

Arthur Hayes, the former CEO of Bitmex and current CIO of Malestrom, a crypto-focused early-stage investment fund, has raised concerns about the future of Tether and other stablecoin companies. According to Hayes, big banks like JPMorgan will eventually cannibalize Tether's business model and dominate the stablecoin market.

During an interview on Laura Shin's Unchained podcast, Hayes explained that Tether's success in the crypto market is primarily due to the absence of a similar product offered by the U.S. banking system. However, he believes that this will change once traditional banks are granted permission to issue fiat-backed stablecoins.

The Flaw in Tether's Business Model

Tether's business model revolves around taking dollars, investing them in treasuries, and earning interest from the spread. As a result, the owners of Tether generate billions of dollars in free cash flow annually. Hayes acknowledges the success of Tether in this regard, but he also points out a crucial flaw.

"The people who own Tether make something like $4 or $5 billion in free cash flow every year. It's basically an interest rate: they basically take dollars, stuff it in a bank account, and then they go buy treasury bills and they earn the spread."

Hayes argues that centralized stablecoins like Tether rely heavily on banks to clear and custody their funds. He criticizes bank managers for providing these services to stablecoin companies while failing to achieve the same performance with their own stablecoins. In his own words, these bank managers are "f***ing morons."

The Inevitable Takeover by Banks

Hayes predicts that the dominance of stablecoin companies like Tether will come to an end once traditional banks are allowed to issue their own stablecoins. He believes that banks like JPMorgan will quickly replace Tether and other stablecoin companies, leveraging their existing infrastructure and reputation.

According to Hayes, the current stablecoin companies have no defensible business model because they rely on banks to custody their funds and enable them to trade. Once banks enter the stablecoin market, they will offer the same interest rates and services, rendering the existing stablecoin companies obsolete.

Tether, with a market cap of $91.5 billion and $4 billion in excess reserves, is currently one of the largest stablecoin companies. However, its future may be uncertain if Hayes' predictions come true.

What do you think about Arthur Hayes' perspective on the future of Tether and centralized stablecoins? Share your thoughts in the comments section below.

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  • This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (
  • You can only purchase gold bars at least 99.5% purity. (
  • Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (
  • (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (
  • Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (

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