Crypto Bros Are a Risk to Stability, Just Like Trade

CIRCLE INTERNET GROUP Inc.'s blockbuster initial public offering has lent an aura of legitimacy to digital clones of fiat currencies. It has also put regulators and policymakers on notice. With crypto going mainstream, they need to assess the threat it poses to global financial stability.

- Bloomberg

Citigroup Inc. is describing 2025 as a possible "ChatGPT moment" for stablecoins, which its analysts have pegged for a sevenfold expansion over the next five years. However, for the market to reach $1.6 trillion by 2030, a lot of the dollars held as banknotes and other liquid assets by households and firms will have to get tokenized into the likes of Tether's USDT and Circle's USDC.

Stablecoins defend 1:1 convertibility into fiat money by parking funds in liquid assets in the currency they promise to pay out.

The overwhelming majority of the $61 billion of USDC in circulation, and USDT's $155 billion in liabilities, are supported by short-term US government debt. More such digital dollars are coming. Big US banks have had discussions on a joint stablecoin project to challenge the tech industry's dominance, according to the Wall Street Journal.