STABLECOINS NOT STABLE: 1914 DEPEGS SO FAR THIS YEAR!
Stablecoins have great potential –if– the model is changed!
Links to two Moody’s sites:
The BIS paper can be downloaded below:
Stablecoins reputation for stability is CRUSHED with 609 depegs of “large cap” coins this year. Not so stable!
The BIS and Moody’s Analytics both come out with SHOCKING statistics on stablecoins.
👉TAKEAWAYS FROM THE BIS AND MOODY’s:
🔹 🔥BIS: the stablecoins in circulation today do not meet the key criteria for being a safe store of value and a trustworthy means of payment in the real economy.🔥
🔹 🔥Moody’s: Large cap stablecoins depeged 609 times in 2023 through mid-September, while all stablecoins had 1914 depegs!🔥
🔹 “Moody’s data shows that depegs are remarkably common among stablecoins and seen for a host of macro and coin-specific factors.”
🔹 Of 68 stablecoins examined in the BIS report NONE have maintained peg parity at all times.
🔹 BIS studied 64 stablecoin pegs over 3.5 years and found:
Fiat-based coins: maintained peg for 94% of days
Crypto-backed coins: 77%!
Commodity-backed coins: 50%!😱
🔹 BIS, there is currently no guarantee that stablecoin issuers could redeem users' stablecoins in full and on demand.
🔹 The lack of transparency regarding the availability and quality of these reserves may undermine trust in stablecoins’ credibility.
Moody’s figures for Value at Risk (VaR) on stablecoins show how regulators’ fears of stablecoin risk bleeding into traditional markets are likely well-founded.
Stablecoins' reputation for stability was just CRUSHED by both the BIS and Moody’s Analytics.
Moody’s is so concerned about the impact to DeFi that they are now selling a special analytical tool (don't call it a credit rating) to minimize the risk to crypto treasuries and reduce price fluctuations.
I don’t know about you, but you shouldn’t need to buy a tool from Moody’s to "navigate the market with confidence" of coins that are supposedly “stable.”
Am I missing something?
The BIS shows that stablecoins are about as stable as the S&P 500! Sure, fiat-backed stablecoins are stable when compared to Bitcoin, but that isn’t saying a lot.
These revelations came just after the UK published discussion regulations for stablecoins that were crushing. Now we know why the Bank of England was so strict!
Last night, the EU announced its new stablecoin requirements, and while not as severe as the UK’s, they are still very tough: larger coins are required to keep 60% of assets at banks, and smaller coins require 20% of assets to be immediately available.
That the BIS blasted stablecoins in their research will be no surprise to crypto fans who know that the BIS has had nothing but disdain for the crypto industry.
Moody’s, on the other hand, has no “axe to grind” but sees so much volatility in stablecoins that they feel they can profit by selling a predictive tool.
If that isn’t "unstable," what is?
READ THIS NEXT:
The UK’s proposed stablecoin laws will CRUSH them. When we see how unstable stablecoins really are its easy to see why they were so strict!