US Dollar Faces Rising Competition in Stablecoin Market: Insights from Tether Co-Founder

The dominance of the US dollar in the stablecoin ecosystem is facing growing competition, according to Reeve Collins, co-founder of Tether. Speaking to Cointelegraph in Dubai, Collins highlighted how other currencies, assets, and tokenized real-world assets (RWAs) are emerging as viable alternatives for backing stablecoins. While dollar-backed stablecoins currently lead the market, he emphasized that the landscape is evolving rapidly, with new opportunities for innovation and diversification.

The Dollar’s Dominance Under Threat

Collins acknowledged that the US dollar remains the backbone of the stablecoin market, particularly within the crypto space. “The stablecoin definitely helps preserve the dollar dominance, especially in the crypto space,” he stated. “The dollar is kind of the reserve currency of crypto.” However, he noted that this dominance is not guaranteed indefinitely.

Other currencies and asset classes are entering the competition by offering higher yields or unique benefits to users. For example, stablecoins backed by commodities like gold, money-market funds, or tokenized real-world assets could appeal to those seeking better returns. These options also provide users with diversified exposure beyond traditional fiat-backed stablecoins.

Exploring New Backing Mechanisms

Collins, who is also involved in bringing stablecoin yield to users through Pi Protocol, explained that the future of stablecoins lies in expanding beyond traditional fiat currencies. He suggested that assets such as money-market funds, commodities, and gold could soon play a significant role in backing stablecoins:

“When you can back it with money market funds, for instance, that generate a higher yield than T-bills and other things like that that are coming onchain, where there’s a lot of yield that will be generated. Those will take precedence.”

He explained that these alternatives will “start winning” by offering higher returns, making them more appealing than traditional dollar-backed stablecoins. Tokenization of real-world assets (RWAs) could also create new opportunities for stablecoin backing. This innovation would give users a wider range of choices beyond just fiat currencies.

“You’re going to have a lot of choices other than just dollars,” Collins predicted, emphasizing the potential for RWAs to revolutionize the stablecoin market.

Trump-Linked Stablecoin: A Catalyst for Global Adoption

In March, World Liberty Financial (WLFI), a project backed by former US President Donald Trump, launched its stablecoin on BNB Chain and Ethereum, although the tokens remain non-tradable for now. Collins viewed this development as a pivotal moment for the stablecoin industry, signaling widespread acceptance and adoption.

“The President of the United States launched a stablecoin. It’s impressive. It lays the foundation for the rest of the world to do it as well,” Collins remarked. He believes that Trump’s involvement will encourage institutions, governments, and fintech companies to embrace stablecoins, further legitimizing the asset class.

According to Collins, the entry of a high-profile figure like Trump into the stablecoin space demonstrates that these digital assets are now “fully accepted.” This move could pave the way for global participation, as other countries and entities may follow suit in exploring stablecoin initiatives.

What Does This Mean for the Future?

The rise of alternative backing mechanisms and growing acceptance of stablecoins signal a shifting financial landscape. Although the US dollar remains dominant, innovative solutions like tokenized assets and higher-yield options are challenging its supremacy. These developments highlight the potential for a more diversified stablecoin market.

Collins’ insights suggest the stablecoin market is entering a new phase of diversification, driven by technological advancements and growing global interest. As more players enter the space, users can expect a wider variety of stablecoin options tailored to their needs. These options may offer higher returns or enable asset diversification. Additionally, seamless cross-border transactions could become a key feature of these evolving solutions.

Final Thoughts

The US dollar’s stablecoin dominance is challenged by tokenized assets and higher-yield alternatives. Reeve Collins noted that high-profile figures, such as Donald Trump, are accelerating global stablecoin adoption.

As the market evolves, competition for stablecoin dominance is expected to intensify, providing users with more choices. It remains uncertain whether the dollar can hold its position or if new players will take the lead. However, one fact is undeniable: the stablecoin revolution is still in its early stages. This growing competition highlights the rapid innovation within the financial landscape.