A stable coin bankrupt

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Von Krypto News Österreich

Der Europäische Ausschuss für Systemrisiken (ESRB) hat am Donnerstag einen Bericht veröffentlicht, in dem die drei größten Albtraumszenarien dargelegt werden, in denen sich eine Krise in der Kryptoindustrie ausbreiten und ein „systemisches Risiko“ für das gesamte Finanzsystem darstellen könnte. Das größte aufgeführte Risiko ist ein potenzieller Run auf einen „großen, durch Reserven gedeckten Stablecoin“ wie Tether (USDT) oder USD Coin (USDC). Die Verbindung von Crypto zu TradFi In seinem 77-seitigen Bericht argumentierte der ESRB, dass mit dem Wachstum der volatilen Kryptoindustrie auch ihre Verbindung zur Mainstream-Finanzwelt wächst. Der Vorstand glaubt nicht, dass diese Vernetzung in naher Zukunft irgendeine Art von …
The European Committee on System Risks (ESRB) published a report on Thursday in which the three largest nightmare scenarios are presented in which a crisis in the crypto industry could spread and a "systemic risk" for the entire financial system. The biggest risk listed is a potential run on a "large stable coin covered by reserves" such as Tether (USDT) or USD Coin (USDC). The connection from crypto to tradfi in its 77-page report argued that the growth of the volatile crypto industry also grows its connection to the mainstream finance world. The board does not believe that this networking in the near future of any kind of ... (Symbolbild/KNAT)

The European Committee on System Risks (ESRB) published a report on Thursday in which the three largest nightmare scenarios are presented in which a crisis in the crypto industry could spread and a "systemic risk" for the entire financial system.

The largest risk listed is a potential run on a "large stable coin covered by reserves" such as Tether (USDT) or USD coin (USDC).

The connection from crypto to tradfi

In its 77-page report, the ESRB argued that with the growth of the volatile crypto industry, its connection to the mainstream financial world is growing.

The board does not believe that this networking in the near future represents some kind of "systemic risk" for "basic services", and indicates that "there is only a sporadic connection between the booms and bankruptcy of crypto-assets and traditional finance.

However, there are various ways of how this risk can manifest itself in the further course. This includes the failure to recognize how forms of networking develop and the further introduction of crypto technologies in traditional finance itself.

Currently secured stable coins are one of the main connections between crypto and tradfi. These are crypto-assets, the price of which remains bound to a relatively price-stable non-crypto-asset such as Fiat currency or gold and that are covered by reserves that contain these assets.

"A run on a stable coin covered by reserves would lead to forced sales of marketable debts and withdrawal from banks," wrote the ESRB. "There is always the possibility that a greater panic becomes."

StableCoin panic

StableCoin panic is nothing new for the crypto industry. In May 2022, Tether Return pressure in May 2022 within the billion dollar limit, but still managed to keep his bond on the dollar. In March 2023, the USDC was released to flee in USDT for several days after the Silicon Valley Bank collapsed, which held a large part of the USDC reserves to cover the USDC.

crypto is also connected via banks and other institutions with tradfi that enable the exchange between crypto-assets and fiat currency. The board pointed out that these institutions can also be confronted with runs and bankruptcy - similar to Silicon Valley Bank, Silvergate Bank and Signature Bank in March.

"Overall, this report comes to the conclusion that the connections between the crypto-asset and the traditional financial world are still extremely modest."

Apart from a stable coin run, the board claimed that an increasing importance of crypto-assets within the payment system could lead to risk transfer to the tradfi world. The International Monetary Fund (IMF) has warned of similar risks around El Salvador recommend Bitcoin as a legal means of payment.

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