Arthur Hayes said that stablecoin issuers who cannot immediately tap a large exchange, a Web2 platform, or a legacy bank will struggle to survive.
In a June 16 blog post, the BitMEX co-founder recounted how the banking shutdowns in the 2010s in Hong Kong and Mainland China drove traders toward Tether.
Bitfinex and Tether allowed users to wire dollars into one account, mint USDT, and transfer tokens 24/7 between major exchanges.
According to Hayes, this early network effect forged lasting trust in USDT across Greater China and the Global South, creating a moat that later entrants struggle to cross.
Three distribution gates
Hayes reduced stablecoin success to a single metric: access to millions of users through either a large crypto exchange, a Web2 platform, or a legacy bank.
Tether controls the first gate, Circle rents the second by giving Coinbase half its net interest income, and future bank-issued coins could claim the third. As a result, Hayes assessed that any promoter lacking one of those channels “has no business.”
Issuers earn by holding reserves in Treasury bills and paying “little to no interest” to depositors. Because USDT is accepted wherever dollar demand is acute, Tether keeps the full spread.
Circle forfeits half to Coinbase to compensate for weaker reach. New tokens would need to rebate yields to attract users, shrinking margins and raising breakeven thresholds. Major exchanges partner with established coins, while social media and banking giants plan in-house projects.
Hayes warned that unaligned issuers will face expensive distribution deals or be forced to rely on speculative marketing. He added that without scale most won’t survive once the listing enthusiasm fades, even if early share prices soar.
Investor caution
Hayes shared his view that Circle’s initial public offering is the opening move in a cycle that will usher imitators to US markets at richer valuations but thinner economics.
He advised traders to treat upcoming deals like short-term trades rather than long-term holdings, noting that short positions remain dangerous while liquidity persists.
Hayes concluded that closed distribution channels, rather than technology, set the ceiling for stablecoin growth, leaving Tether dominant and Circle sustainable only through its alliance with Coinbase.
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