Wormhole founder harshly criticizes Tether and Circle for "profiting off others' efforts," while Tether counters: the main function of USDT is to combat inflation.

Dan Reecer, co-founder of the cross-chain protocol Wormhole, criticized stablecoin issuers Tether and Circle, stating that both hold 100s of billions of dollars in reserves in a high interest rate environment, making interest from buying U.S. Treasuries while not sharing any profits with users. This model is not only unfair but also unsustainable in the long run. (Background: Tether is launching a new stablecoin USAT compliant with U.S. regulations, but states: not a legal tender, not insured or guaranteed by government agencies) (Supplementary background: Tether is valued at 500 billion USD, with SoftBank and Ark Invest evaluating a stake) At the DAC 2025 event held by the Latin American cryptocurrency exchange Mercado Bitcoin, Dan Reecer publicly pointed out that stablecoin giants Tether and Circle, holding 100s of billions of dollars in reserves in a high interest rate environment, make interest from buying U.S. Treasuries while not sharing any profits with users. In other words, users lend cash to the stablecoin issuers and only receive a digital dollar that does not generate any income. Reecer bluntly stated that this model is not only unfair but also unsustainable in the long run. Stablecoin issuers are crazily "printing money," yet holders receive no income. Dan Reecer pointed out that Tether and Circle profit from holding U.S. Treasuries that back their stablecoins, which is akin to "printing money." He cited that Tether reported 4.9 billion USD in net profits in its second quarter earnings this year, which also drove the company’s valuation to soar to 500 billion USD in the latest financing round. However, Reecer warned that these profits are not returned to stablecoin holders. Reecer stated that in an environment where interest rates remain high, users will eventually demand a share of the profits from U.S. Treasury bonds, or they may shift their funds elsewhere. He stated at the meeting: "If I hold USDC, I am losing money, and the money I lose is being made by Circle." Reecer further stated that some emerging platforms are currently trying to respond to this demand, allowing stablecoin profits to be directed to applications, indirectly rewarding users or directly distributing them to users, rather than being monopolized by the issuers. Tether responded: USDT is a digital dollar, not an investment product. In response to this criticism, a Tether spokesperson stated that the positioning of its issued dollar stablecoin USDT is very clear: USDT is a digital dollar, not an investment product. The spokesperson stated that USDT has hundreds of millions of users globally, especially in emerging markets, where USDT is seen as a lifeline against inflation, unstable banking systems, and capital controls. The spokesperson further pointed out that while a few percentage points of yield may attract wealthy U.S. or European users, the true value of USDT in developing countries lies in combating extreme inflation: while a few percentage points of yield may make a difference to wealthy Americans or Europeans, what truly matters to our USDT user base is combating the severe inflation commonly seen in developing countries, where inflation rates can reach 50% to 90% annually, and the local currency's value against the USD can decrease by as much as 70% annually. Additionally, the spokesperson clarified that sharing profits with users would fundamentally change the nature, risk profile, and regulatory treatment of stablecoins. Competitors attempting to launch yield-bearing stablecoins are, in fact, targeting different audiences, and these platforms will also bear additional risks. Related Reports: Over 20% stablecoin APR: Seize the opportunity of Plasma's launch subsidies, tutorials and precautions. In-depth analysis: What big chess game is Cloudflare playing behind the launch of the stablecoin "NET Dollar"? Cloudflare's "AI micro-transaction future": NET Dollar stablecoin, E-mail combination punch. <Wormhole founder criticizes Tether and Circle for "profiting alone" while lending out, Tether retorts: USDT's main role is to combat inflation.> This article was first published in BlockTempo, the most influential blockchain news media.