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The issue with stablecoins is not just regulatory. They are fragile to market shocks.


How so? Stable coins issued under the GENIUS Act are fully reserved, unlike regular banks.


They’re backed by treasuries and subject to treasury market shocks (like the March 2020’s dash for cash). Large redemptions can see a feedback loop of redemption -> rushed selling -> treasury market stress -> redemption. Exactly the sort of scenario one might expect as the secular trend of the weakening dollar bubbles to the market’s surface.

Stablecoins hold a sizable portion of the treasury market - https://fintelegram.com/stablecoins-became-a-top-20-us-debt-...




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