A Cornell University study showed that a drop in user confidence in stablecoins could lead to a collapse in the US bond and Treasury markets.
A report from experts from Cornell University in the United States notes that amid the ongoing crypto winter, stablecoins have become the preferred choice for many crypto investors who want to trade various digital assets or convert them into fiat money.
At the same time, stablecoin issuers who intend to demonstrate to the community the reliability of their cryptoassets are actively building backing reserves by acquiring government bonds and US Treasury bills.
USDT stablecoin issuer Tether holds more than 58% of its reserves in US Treasury bonds, equivalent to about $40 billion. billion
Commenting on the results of the study, Cornell University economics professor Eswar Prasad said that during the course of the study, he spoke with representatives of several US regulators who are concerned about the growing influence of stablecoins in traditional financial markets.
“The concern of regulators is that the loss of confidence in stablecoins could trigger a wave of redemptions. This would mean that stablecoin issuers would have to sell their holdings in treasury securities. At the same time, a large volume of repayments, even in a fairly liquid market, can create a panic in the underlying securities market,” Prasad said.
He clarified that US bond market sentiment is currently volatile, and any stablecoin incident could lead to a multiplier effect and create strong pressure to sell Treasuries.
Earlier, analysts at the Central Bank of Canada urged regulators to oversee stablecoins more closely due to their risks to the international financial system.
Source: Bits
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