Overlooked stablecoin risks
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Overlooked stablecoin risks
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Overlooked stablecoin risks
Inspired by a Macro Musings podcast I listened to last night (linked below), I dove into a paper that I’d missed, published last month by the MIT Digital Currency Initiative – “The Hidden Plumbing of Stablecoins Financial and Technological Risks in the GENIUS Act Era”.
It makes some good points about stablecoin risks, which many in the industry dismiss as irrelevant fear-mongering but which have to be taken into account when building an alternative system for global finance.
We’re used to insisting that stablecoins have no risk because they are backed by US Treasuries and related assets, the safest collateral in the world.
But we’re overlooking a bunch of vulnerabilities beyond the control of stablecoin issuers, to do with financial markets and the underlying technology. They may have an extremely low probability of becoming an issue, but they’re not nothing.
