Blockchain Breakthrough: Stablecoin 2.0 Sets Stage for Major Financial Shift

Let's get to the big story.

Breakdownstable is building a new way to turn real world assets like government bonds and money market funds into digital money.

Now users deposit these tokenized assets and the protocol splits them into two parts USST stablecoin that represents the principal and can move freely across Defi and YLD, a separate token that holds the yield and is limited to approved holders to meet regulatory rules.

Now the platform also uses a governance.

Token which gives holders voting power as well as access to rewards as the protocol grows.

Joining me from Abu Dhabi Finance Week is Reeve Collins, chairman and co-founder of Stable and co-founder of Tether.

So thank you so much, Reeve, for joining us today.

So you say that stablecoin, stablecoin 2.0 fixes the flaws of first gen stablecoins.

So for our viewing audience, explain what you're doing and why you think your approach sets you apart.

Absolutely, it's great to be here and I don't want to say that it fixes the flaws.

I want to say it's the evolution of the stablecoin because when we first created the stablecoin over a decade ago, it actually solved a huge problem the world had, which is pretty apparent because now it is the killer app of blockchain.

Just look at the volume that is traded utilizing stablecoins and the worldwide adoption.

So stablecoins enabled the global instant and free movement of money.

However, after 10 years, after the industries evolved, people are realizing that it'd be great to also have all of the collateral on chain.

Now that RWAs are being tokenized and that collateral is coming on chain.

We can now ensure that you know 24/7 that the collateral is there and just as importantly, it's about the yield.

These centralized stablecoin companies have issued hundreds of billions of dollars now in reserve, and they're earning a yield on that.

But the evolution is going to enable the community to earn that yield because we now have the technology.

The technology is there to tokenize that yield, so it's not.

Split from the principal.

The principal backs the stablecoin, and the yield token goes to the user.

So those two things are what we're calling stablecoin 2.0, the evolution of the stablecoin, because it now makes sense for the rest of the industry to follow these advancements because now the community truly reaps the rewards.

Yeah, and Reeve, as you mentioned, you've been entrenched in this space for many years and you also mentioned that you're separating the stablecoin from the yield through USST and YLD.

So why are you designing it that way and how does it actually help manage the risk?

Well, now that all of the collateral is on chains, so people know that the collateral is there and it backs the amount of silver coin in circulation.

But the other real narrative is the RWA narrative.

So lots of high quality, low risk, great yielding assets, treasuries, money market funds, but more and more are being tokenized and brought up and changed.

One of the biggest utilities for them is going to be the backing of stablecoins.

However, you can't have a stable coin that's also yield bearing because then it's a security, so it's not freely trading that creates some friction.

Plus, the Genius Act in the US is stating that that's not going to be allowed.

So our solution separates that yield from the principle.

So now it makes the USSD, our universal stablecoin, completely compliant both with the Genius Act and the regulations around the rest of the world, and it enables you to have a tokenized income stream from that yield.

And importantly, it allows the person who put that money in the system to receive that token.

And they can also, if it's an organization or a company that's doing that, they can also figure out how much they want to divvy out.

It's all very programmable, so they can share it with their users if they want to, but it's totally separate, and that separation is what makes it regulatory compliant.

And Reeve, I do want to get your take on who you believe should ultimately capture the value of the digital dollar of a digital dollar, and what has to change for that to shift from institutions to everyday users.

Well, look, it's a great question.

And so, you know, it's no surprise how successful stablecoins have become because it's very obvious, right?

We now have a technology that enables you to move money globally, instantly for free outside of banks.

And so in the beginning, it made a lot of sense that these centralized institutions um captured all of that upside.

However, with the advent of the technology that we have today, web 3, wallets and tokens.

We now get to deliver on the promise and the promise of Web 3 is that the community, the people who have put the money into the system, are the ones that should reap the rewards.

And so that's what this technology enables.

So when you're saying why are we enabling the community to get that, because it is the natural evolution now that the technology is there, wouldn't you want to be the one who puts the money in and actually get the rewards from it?

And so you're going to get the community is going to get about 80%.

And yes, the platform keeps the money to keep the lights on to ensure that it can grow and scale, but the bulk of all the revenue that's generated from that ecosystem should be distributed to those people who put the value.

Into the ecosystem and the stablecoin, stablecoin 2.0, is just one of the first examples.

You can also see the same thing taking place within banking.

So web 3 banking and on-chain banking.

There will be a token, and that token will aggregate and collect most of the fees, and those tokens will all be distributed to the users.

So these types of business models is what I believe to be the future, and that future will be delivering on the promise of Web 3 because the community really should be reaping these rewards.

And, finally, before I let you go, how far away are we from seeing stablecoins and tokenized assets play a mainstream role in the global financial system?

So that's a great question, and we've all seen the regulatory winds shifting.

And now that that's taken place and the US is leading the charge with really enabling large institutions and organizations and banks who had never touched this space before to dip their toes in and to fully dive in.

So once more the regulation gets finalized and coming out, you'll see the big players getting involved.

And so that's what's going to Unlock the trillions of dollars waiting on the sidelines.

You've also heard a lot of buzz around large organizations stating that they want to issue their own stablecoins.

That's going to be the narrative in 2026 and 2027.

And my prediction is all large ecosystems, it's not just banks and fintechs, but ecosystems and large companies that have kind of their own internal economy, they're all going to issue their own currency.

Because it gives them more control, more data around their users, more revenue, more profitability, and the ability to actually give back to their users, so they're able to provide, they're able to move money much more efficiently within their ecosystem and then provide rewards to their users.

So that's where I see this unfolding over the next few years.

Yeah, and Reeve, before I let you go, since you're joining us all the way from Abu Dhabi Finance Week, what do you think is different this year from previous Abu Dhabi Finance Week gatherings?

You know, they do such a good job here in Abu Dhabi hosting people from around the world and really world class thinkers and thought leaders in the space and all the finance, and it's great to see how much more crypto is being spoken about this year and it's and stablecoins definitely are the narrative tokenization is the narrative.

It's because a lot of the traditional institutions that have come to this for many years are now.

Dipping their toes in and fully leaning into the crypto ecosystem and so it's definitely much more than narrative and so I'm speaking on two panels here, which is really great to also see how much they're embracing it and all the people from around the world, both in the crypto space and traditional, have come out here to just really participate and share with the world where they think the future of finance is heading.

Well, Reeve, appreciate your time.

Thank you so much for joining us.

I know it's early evening over there, so appreciate your time and thank you so much for sharing all of your perspectives.

Thank you very much.

I appreciate it.