{"id":12948,"date":"2025-06-10T16:20:08","date_gmt":"2025-06-10T14:20:08","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=12948"},"modified":"2025-06-10T16:20:08","modified_gmt":"2025-06-10T14:20:08","slug":"stablecoins-a-safer-alternative-to-bank-deposits-insights-from-a-recent-discussion","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/06\/10\/stablecoins-a-safer-alternative-to-bank-deposits-insights-from-a-recent-discussion\/","title":{"rendered":"Stablecoins: A Safer Alternative to Bank Deposits? Insights from a Recent Discussion"},"content":{"rendered":"

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Stablecoins could be more secure than deposits kept at commercial banks, as stated by Diogo Monica, general partner at Haun Ventures.<\/p>\n

During a panel discussion entitled \u201cStablecoins: Programmable Money in a Digital World\u201d at the Proof of Talk conference in Paris on June 10, Monica explained that numerous stablecoins are supported by reserves at globally systemically important banks (G-SIBs) or in short-duration US Treasury bills, which he believes to be more reliable than commercial bank deposits.<\/p>\n

\u201cIt\u2019s decidedly much better than possessing a dollar in a commercial bank,\u201d Monica remarked.<\/p>\n

Proof-of-Talk panel featuring Haun Ventures general partner Diogo Monica. Source: <\/em>YouTube<\/em><\/a><\/figcaption><\/figure>\n

Monica\u2019s statement highlighted that a deposit at a commercial bank is a liability for that bank, which could have repercussions for the creditor if the bank collapses and they are not protected by depositor insurance. A dependable stablecoin issuer, on the other hand, is expected to depend on G-SIB deposits or short-term treasury bills instead, which are arguably more secure.<\/p>\n

In simpler terms, Monica contended that stablecoins signify a claim to premium collateral rather than an uncertain regional bank. Nonetheless, stablecoins and their issuers frequently introduce their unique category of risk.<\/p>\n

Related: <\/strong><\/em>Tether USDT stablecoin displayed on Bolivian store price tags<\/strong><\/em><\/a><\/p>\n

Tether case emphasizes stablecoin risk<\/h2>\n

Although stablecoins may promise enhanced collateralization theoretically, their dependability significantly hinges on the actions of the issuing organization. Tether, the largest centralized stablecoin issuer by market capitalization, has endured consistent scrutiny concerning transparency and risk oversight.<\/p>\n

In late 2018, Crypto Capital \u2014 the payment processor associated with Tether-linked cryptocurrency exchange Bitfinex \u2014 lost access to roughly $850 million in exchange assets. Court documents illustrate<\/a> how this event led Tether to lend at least $625 million of its reserves to Bitfinex to maintain the platform\u2019s solvency.<\/p>\n

\u201cAt no point did Bitfinex or Tether inform the market that Tether had transferred at least $625 million to Bitfinex, or that Bitfinex had faced severe liquidity challenges,\u201d the court documents stated.<\/p>\n

In an affidavit submitted<\/a> on April 30, 2019, Tether\u2019s general counsel mentioned that USDt (USDT<\/a>) was approximately 74% backed by cash and equivalents due to the loan. The stablecoin sustained its liquidity until Bitfinex completely repaid its debt to Tether, wiring<\/a> the final $550 million in early 2021.<\/p>\n

Related: <\/strong><\/em>Tether aims to open-source Bitcoin mining OS; CEO mentions \u2018no requirement\u2019 for third-party vendors<\/strong><\/em><\/a><\/p>\n

Lack of transparency remains a concern<\/h2>\n

Even after releasing reserve attestations in recent years, Tether has yet to perform a complete independent audit. In March, CEO Paolo Ardoino declared that the company is \u201cengaging with a Big Four accounting firm<\/a>\u201d as it seeks a long-anticipated audit of its reserves. However, no audit has been disclosed so far.<\/p>\n

This absence of guarantees led Cyber Capital founder Justin Bons to assert that Tether<\/a> is \u201cone of the most significant existential threats to crypto as a whole\u201d in late 2024. He commented at that moment:<\/p>\n

\u201cAn \u2018Auditor\u2019s Report\u2019 or an \u2018Accountant Report\u2019 isn\u2019t a formal audit whatsoever! Notwithstanding the assertions, Tether has never submitted its claimed reserves to a legitimate unrestricted, third-party audit!\u201d<\/p><\/blockquote>\n

Magazine: <\/strong><\/em>Crypto aimed to topple banks, but is now mirroring them in stablecoin conflict<\/strong><\/em><\/a><\/p>\n