Fitch Ratings explained that systemically large enough stablecoins could pose a risk to the market for short-term securities such as financial bonds.
According to Fitch Ratings, stablecoin operators’ holding large-scale financing bills in reserve could affect both the financing bond market and other market participants. to experience turbulence may cause.
“If the infrastructure that stablecoin operators use to connect with traditional markets, and the partners they work with, are not experienced in handling transactions when the market is under pressure or volatile, these risks can arise. may become more severe”
Some operators use financial assets in short-term markets to fix the value of the stablecoins they produce.
As of June 2021, 49% of Tether’s reserve, the producer of USDT, consists of certificates of deposit and financing bills.
It is proposed that 80% of the reserves of the Diem project, which is supported by Facebook but not yet in circulation, will be formed from short-term government securities.
Fitch Ratings, in its post on Monday, “The current state of growth rates and portfolio allocations indicates that stablecoins could become a significant group of investors in the US financial bond market.” made a statement.
“For example, in a scenario where the value of the stablecoin market grows close to today’s rates and the portfolio allocation remains stable, the financing bills (stablecoin operators) owned are comparable to those of money market funds. in two or three years can pass.”
USDT, which had a market cap of approximately $21 billion at the beginning of this year, has grown by more than 230% in ten months. 70.2 billion dollars reached market value.
While it is stated that stablecoins may pose a risk to the short-term securities market, this is the subject of stablecoins. “it depends on how regulations will evolve” expressed.
“While imposing a requirement on stablecoin operators to multiply the safe and highly liquid assets in their reserves may reduce the weight of the financing bonds (in these reserves), this [aynı anda] This could lead to an increased impact of stablecoins on short-term government markets. Other initiatives, such as developing digital central bank money, can significantly impact demand for stablecoins.”