Reeve Collins helped build USDT, which is the most widely used stablecoin in the world. Now he says the infrastructure he created has structural flaws, and is building the fix.
Collins co-founded Tether in 2013, which started as a simple proposition: a dollar-denominated token that moves on a blockchain. Which is weird compared to other crypto, because it’s not an “investment”, compared to other coins.
His bet worked, and he’s grown it into a $180 billion reserve operation and the 11th largest holder of U.S. Treasuries globally. Today, Tether processes trillions of dollars in transactions annually. Collins isn’t personally involved in Tether’s operations anymore, but the industry he helped create is the one he is still building in.
Speaking on the On the Margin podcast, Collins outlined his view of where stablecoins go from here: higher-yielding reserves, yield that actually reaches users, and an infrastructure layer that lets any institution, banks, brands, and sports franchises issue its own currency on top of it.
The Structural Flaw in Stablecoin 1.0
Collins describes the core problem plainly: Tether holds user dollars, invests them in U.S. Treasuries currently yielding 3 to 4 percent, and retains all of that yield. Users receive utility, global, instant dollar access, but no return on the value they have parked in the system.
“The elegance of Tether’s business model is in its simplicity,” he says. “Give me a dollar. I issue you a token.”
That simplicity made Tether dominant and built in an extraction mechanism that Collins believes stablecoin 2.0 should eliminate.
His new protocol, STBL addresses this through a dual-token structure. The stablecoin splits into a spending token and a yield token, allowing holders to transact while simultaneously accruing yield.
It’s something that crypto’s current architecture cannot support without requiring users to lock up funds (preventing them from using their coins)
STBL is also moving beyond treasury-only backing, and Collins has structured a deal with Hamilton Lane’s SCOPE fund, which targets 7 to 8 percent returns, blended with treasury exposure for a net yield in the 5 percent range. The goal is a stablecoin backed by institutional-grade assets with meaningful yield passed directly to users and issuers.
This isn’t XRP.
When I pressed on whether STBL risks the same fate as XRP, where years of institutional adoption promises with little follow-through Collins drew a structural distinction:
“XRP is just another centralized company saying use my token,” he says. “STBL is a decentralized protocol. We’re not saying use our token, we’re saying here’s the technology, create your own.”
The pitch to institutions is infrastructure access rather than token adoption. Banks, large platforms, and ecosystems would issue their own stablecoins using STBL’s underlying protocol, choosing their own backing assets and setting their own yield distribution parameters.
Collins believes this model reflects where financial infrastructure is heading. “Banking services will become a utility,” he says. “You don’t care what power company gives you power. You are not going to care which bank sends your money.”
The layer above that utility is loyalty. It’s AI agents routing transactions toward whichever currency ecosystem offers the best rewards for a given user, so it could be sports teams, gaming platforms, and consumer brands becoming issuers.
The transactional value flows toward any community that users actually care about.
The Regulation Problem
The conversation touches on what is now a live regulatory debate: Iran had approximately $400 million frozen in USDC. The episode illustrates a tension Collins does not shy away from: dollar-backed stablecoins are, functionally, extensions of U.S. dollar jurisdiction. The U.S. government can reach into them.
“It absolutely is becoming more centralized,” Collins says. “And there’s going to be an equilibrium.”
He distinguished between two regulatory paths, the first one being the U.S. model: private-sector stablecoin issuance with federal oversight, which is now taking shape through the GENIUS Act framework and preserves some distance between government and monetary control. The second is the CBDC model, where governments issue programmable currencies directly.
Collins is explicit about the risks of the latter – which is a fully programmable government currency that allows automatic tax collection, real-time transaction freezing, and complete financial surveillance. Authoritarian governments he noted are pursuing this capability with urgency.
“You won’t have any financial sovereignty … It becomes a surveillance state.”
He continues to hold Bitcoin as a structural counterweight to this trajectory not as a speculative position, but as a permanent alternative outside any government’s monetary architecture.
How Reeve Collins Did It:
Collins graduated in 1997, took a job at one of the first online advertising agencies in the United States, and watched it go public for $6.6 billion within two years. The pattern he observed was that new infrastructure is the best way to start a business. Early movers capture structural advantages.
When he encountered Bitcoin, he saw that same exact structure. Not the currency argument, which everyone was debating, but the blockchain as infrastructure for global, instant, low-cost money movement.
“The internet gave the world the global, instant, free movement of information,” he said to me, “Blockchain gives it the same thing for money.”
Tether’s first-mover advantage was decisive, and by the time competitors entered, Tether had already become the default trading pair across every major exchange – which compounded.
“It was three or four years before anyone else even tried,”
Whether STBL can replicate that structural capture, this time in a far more competitive, regulated, and institutionally aware market is the open question his current work is designed to answer. Though with his work ethic and connections, I see it as a big player.
When I asked him for advice, Collins didn’t give me platitude. He told me to distinguish investing from speculation, get inside the AI infrastructure now rather than trying to build on top of it from the outside, and hold Bitcoin as a long-term position.
And now the man who built the floor the stablecoin market stands on is now building what he believes should replace it.
