Saturday, March 25, 2023
Bitcoin - Altcoin News
No Result
View All Result
  • Login
No Result
View All Result
Bitcoin News
No Result
View All Result
Home News BUSD

Warning: A Stablecoin Collapse Can Severely Impact U.S. Bond Market

news by news
January 13, 2023
in BUSD, News, Paxos, Stablecoin News, tether, USDC, USDCoin, USDT
0
Warning: A Stablecoin Collapse Can Severely Impact U.S. Bond Market
0
SHARES
2
VIEWS
Share on FacebookShare on Twitter

READ ALSO

Shytoshi Kusama Confirms Unification Addition In Shibarium Docs

Terra Luna Classic Controversial Proposal To Burn 235B LUNC From Community Pool

stablecoin inflow

One area where U.S. regulators are keeping a close watch is the widely expanding crypto stablecoin market. The stablecoin market has already grown to more than $200 billion in size last year. However, one academic has warned that a major stablecoin collapse could severely impact the U.S. bond market.

Stablecoins are basically digital assets pegged to fiat currencies like the U.S. Dollar. Some of the most popular stablecoins currently used in the market are Tether (USDT), USD Coin (USDC), and Binance USD (BUSD).

Stablecoins have been the go-to choice for crypto investors looking to trade in and out of different digital assets or convert them into fiat money. Eswar Prasad, an economics professor at Cornell University said that he has spoken to a few regulators who are worried about the impact stablecoins could have on traditional financial markets.

Stablecoins Pose Risks to U.S. Bonds and Treasury

To understand why a stablecoin run could impact the market, let’s take a look deeper. Currently, USDT stablecoin issuer Tether has more than 58% of its reserves held in U.S. Treasuries which account for a staggering $39.7 billion. Similarly, USDC stablecoin issuer Circle has around $12.7 billion worth of Treasurys in its reserve. BUSD issuer Paxos on the other hand has $6 billion of U.S. Treasury bills.

Now any case of a potential run on a stablecoin would cause users to redeem their crypto assets for fiat. This in turn would cause the issuer to sell-off their assets in the reserves which could, in turn, lead to them selling large amounts of U.S. Treasurys. Speaking to CNBC at Crypto Finance Conference in St. Moritz, Switzerland, Prasad said:

“And I think [the] concern of regulators is if there were to be a loss of confidence in stablecoins … then you could have a wave of redemptions, which will in turn mean that the stablecoin issuers have to redeem their holdings of Treasury securities.

And a large volume of redemptions even in a fairly liquid market can create turmoil in the underlying securities market. And given how important the Treasury securities market is to the broader financial system in the U.S. … I think regulators are rightly concerned.”

He also mentioned that the bond market sentiment is already fragile in the U.S. currently. Thus, any such incident of a stablecoin run could lead to a multiplier effect and create a large selling pressure on Treasurys.

The collapse of the TerraUSD stablecoin already sent shockwaves in the broader crypto space last year. Last year the Fed warned that “stablecoins remain prone to runs, and many bond and bank loan mutual funds continue to be vulnerable to redemption risks”.

The post Warning: A Stablecoin Collapse Can Severely Impact U.S. Bond Market appeared first on CoinGape.

Related Posts

Shytoshi Kusama Confirms Unification Addition In Shibarium Docs
Altcoin News

Shytoshi Kusama Confirms Unification Addition In Shibarium Docs

March 24, 2023
Terra Luna Classic Controversial Proposal To Burn 235B LUNC From Community Pool
24/7 Cryptocurrency News

Terra Luna Classic Controversial Proposal To Burn 235B LUNC From Community Pool

March 24, 2023
Just In: Gary Gensler Lobbied In UK, Canada For Tightening Crypto Rules
24/7 Cryptocurrency News

Just In: Gary Gensler Lobbied In UK, Canada For Tightening Crypto Rules

March 24, 2023
Coinbase VP Hints At Other Countries Filling ‘Crypto’ Vacuum Left By US
Altcoin News

Coinbase VP Hints At Other Countries Filling ‘Crypto’ Vacuum Left By US

March 24, 2023
Binance Resumes Spot Trading After Temporary Maintenance
Altcoin

Binance Resumes Spot Trading After Temporary Maintenance

March 24, 2023
Breaking: Nasdaq To Offer Crypto Custody Services Soon Despite Regulatory Burden
24/7 Cryptocurrency News

Breaking: Nasdaq To Offer Crypto Custody Services Soon Despite Regulatory Burden

March 24, 2023
Next Post
Crypto News Live Updates Jan 13: Crypto Market Cap Jumps Over $900 Billion; Crypto.Com Announces 20% Layoffs

Crypto News Live Updates Jan 13: Crypto Market Cap Jumps Over $900 Billion; Crypto.Com Announces 20% Layoffs

POPULAR NEWS

Bitcoin Price Prediction: On-Chain Data And Analysts Predict More Upside For BTC

Bitcoin Price Prediction: On-Chain Data And Analysts Predict More Upside For BTC

December 7, 2022
Crypto Prices Today: Huobi Token, Ethereum, Dogecoin Is Up; Solana Takes A Dip

Crypto Prices Today: Huobi Token, Ethereum, Dogecoin Is Up; Solana Takes A Dip

December 7, 2022
Donald Trump’s NFT Trading Cards Pump 350% In Value Upon Launch

Donald Trump’s NFT Trading Cards Pump 350% In Value Upon Launch

December 17, 2022
Bitcoin Price Today: BTC Rises By Nearly 2% While BlockFi Files For Bankruptcy

Bitcoin Price Today: BTC Rises By Nearly 2% While BlockFi Files For Bankruptcy

December 7, 2022
Breaking: “Guilty” FTX Executive Will Now Cooperate Against SBF In Probe

Breaking: “Guilty” FTX Executive Will Now Cooperate Against SBF In Probe

February 28, 2023

EDITOR'S PICK

“Operation Choke Point 2.0”: Is US Planning Crackdown Against Crypto Market?

“Operation Choke Point 2.0”: Is US Planning Crackdown Against Crypto Market?

February 9, 2023
With The Rise Of Dogecoin, Is It Right Time To Invest In Meme Coins?

With The Rise Of Dogecoin, Is It Right Time To Invest In Meme Coins?

January 30, 2023
Top Crypto Gainers Today: Toncoin Price Jumps 12.06%, Bitcoin, Aptos, & Solana Also See Positive Price Movement

Top Crypto Gainers Today: Toncoin Price Jumps 12.06%, Bitcoin, Aptos, & Solana Also See Positive Price Movement

December 14, 2022
Breaking: Deutsche Bank Shares Slump 10%; Is It The Next Domino?

Breaking: Deutsche Bank Shares Slump 10%; Is It The Next Domino?

March 24, 2023
Bitcoin - Altcoin News

© 2022 coingger.com

Navigate Site

  • Europe
  • Exchange
  • Elon Musk
  • ETH Price
  • crypto Tax U.S.
  • CZ
  • Crypto Miners
  • BTC Price
  • ChatGPT
  • China crypto
  • Coingecko
  • Binance Smart Chain
  • Bitcoin $100K
  • Airdrop

Follow Us

No Result
View All Result
  • Homepages
    • Home Page 1

© 2022 coingger.com

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In