A stablecoin collapse could spill into the U.S. bond market and economy, professor warns

Home » Business » A stablecoin collapse could spill into the U.S. bond market and economy, professor warns

The near $1.4 trillion collapse of the crypto market in 2022 didn’t make a dent to traditional assets like stocks or to the real economy.But one academic has warned that the failure of a major stablecoin could have an impact on the U.S. bond market, marking a potential new area that investors need to keep an eye on as contagion continues to spread across the industry.Stablecoins are a type of digital currency that is supposed to be pegged one-to-one with a fiat currency such as the U.S. dollar or the euro. Examples include tether (USDT), USD coin (USDC) and Binance USD (BUSD), which are the three biggest stablecoins.Those kinds of coins have become the backbone of the crypto economy, allowing people to trade in and out of different cryptocurrencies without needing to convert their money to fiat.Issuers of those stablecoins say they are backed by real assets such as fiat currency or bonds so that users can redeem their token one-for-one with a real asset.Tether says that more than 58% of its reserves are held in U.S. Treasury Bills, accounting for around $39.7 billion. Circle, the company behind USDC, has around $1 …

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