In Cintelelegraph’s latest video report, we discussed the systemic risks posed by stablescoins to stability of crypto and traditional markets.
Stablecoins have become the backbone of the cryptography ecosystem, because they play a crucial role in the functioning of cryptographic trading and decentralized finance. Their market capitalization has multiplied since the beginning of 2021.
But the lack of transparency around reserves supporting Stablecoins has a lot wondering if their growth is really durable. Recent disclosure of Stablecoins adults have shown that only part of their reserves consists of money, while a significant amount is maintained in the form of risky assets such as commercial papers.
Some analysts fear that, in the event of a slowdown in the market, stablecoin issuers may find it difficult to respond to their customers’ buyout requests. This could potentially trigger a collapse of investor confidence in these stablecoins, with serious consequences for the overall cryptography market.
“The whole thing holds as long as everyone believes that it is good and they all use it for their own trading and that nobody ever tries to withdraw,” said Frances Coppola, financial and critical commentator of the vocal ecupon.
Governments around the world are also concerned with the fact that a collapse of Stablecoin could spread over the traditional financial markets and that they call for stricter regulations.
How serious is the risk by Stablecoins? What are the possible scenarios after a major collapse of Stablecoin? And what can we do to mitigate the risk?
To find out, watch the full video on our YouTube channel and don’t forget to subscribe!
