Bridge executive claims that the market control held by Tether and Circle is ultimately detrimental to the stablecoin sector, according to Ben O’Neill, who leads money movement at Bridge.
Circle and Tether are making it more difficult for stablecoins to function like actual money, according to Ben O’Neill, head of money movement at Bridge.
Key Points:
— Ben O’Neill of Bridge notes that the two leading stablecoin providers each have advantages and disadvantages, and neither is suitable for all applications.
— He suggests that creating additional stablecoins tailored to specific applications would be the ideal approach to achieve optimization.
Miami Beach — According to Ben O’Neill, Bridge’s head of money movement, the stablecoin market, which is largely controlled by Tether and Circle, restricts the competition necessary to develop products that better match the needs of certain important use cases.
“I believe it’s overall harmful to the expansion of stablecoins as a sector, since you have two main players with both strengths and weaknesses in their designs, but neither fits every situation,” O’Neill remarked during a discussion on stablecoin expansion at Consensus Miami.
Tether’s USDT, boasting a massive market cap of roughly $189.5 billion, and Circle’s USDC, which has expanded to approximately $71 billion, each originated in distinct phases of the cryptocurrency landscape.
Tether, initially introduced in 2014 as Realcoin, secured the Chinese export trade sector, O’Neill explained, establishing an unofficial dollar economy accessible outside the traditional U.S. financial framework. Conversely, Circle, founded in partnership with Coinbase in 2018, aimed for the opposite goal: a U.S.-compliant stablecoin that later focused heavily on decentralized finance (DeFi).
From the viewpoint of a major payments entity like Stripe, which owns Bridge, O’Neill highlights the limitations of these two dominant dollar-pegged tokens.
“As a payments provider, I require clear assurance on operational mechanics,” he stated. “With Tether, they propose a 10 basis point burn rate, which is excessively costly for a payments business, or you can use the open market, leaving me without any guarantee.”
“Circle’s revenue model relies on assets under management, and they continuously increase their burn fees. Therefore, if I were a company like Visa, aiming to process trillions in card settlements using stablecoins, I would incur significant USDC burn costs, which would be highly unfavorable,” O’Neill noted.
The remedy, “which must be implemented within the next couple of years,” involves developing more stablecoins designed for particular applications to optimize their performance for those specific needs. Additionally, he emphasized the importance of clearinghouses emerging, describing them as “an exciting opportunity for founders and venture capitalists” to streamline “the most efficient possible exchange between stablecoins.”
Concluding his perspective, O’Neill stated, “Increased competition is essential; otherwise, [Tether and Circle] will continue raising fees, withhold yield distribution, discourage burning, and progressively make stablecoins feel less like money with each adjustment.”