Stablecoins, whilst miss-named (as surely it would be better to call them ‘pegged’ coins), can offer a much lower risk for those who have large amounts of cash compared to leaving money in a bank. Stablecoins can provide greater transparency and security whereby removing the risk of depositors being exposed to bankers lending their cash to other people. The reality is that, once you give your cash to a bank, you become a creditor, and banks can use your money as they wish to generate returns for shareholders - not you.
Johnny. Something is missing here. Any bank can issue a so called stablecoin. And they can say it is backed by cash, but that still leaves coinholders as unsecured creditors. If there is a bankruptcy all creditors have a claim on the sum of all the assets.
To truly be able to say the stablecoin is asset backed the issuer would have to do at least one of two things: make the vehicle holding the asset bankruptcy remote from the issuer. And, ideally the underlying cash would need to be held with a central bank.
Johnny. Something is missing here. Any bank can issue a so called stablecoin. And they can say it is backed by cash, but that still leaves coinholders as unsecured creditors. If there is a bankruptcy all creditors have a claim on the sum of all the assets.
To truly be able to say the stablecoin is asset backed the issuer would have to do at least one of two things: make the vehicle holding the asset bankruptcy remote from the issuer. And, ideally the underlying cash would need to be held with a central bank.
The nuance matters.