As centralized US dollar-pegged stablecoins gain popularity, regulatory capture increases.
Recently, overcollateralized stablecoin dangers have become more apparent. Curve Finance creator Michael Egorov stated that these risks are global government regulatory concerns, not reserve-related risks.
Egorov told Cointelegraph that collateralized stablecoins' underlying assets, including as bank cash deposits and government securities like US Treasury bills, are subject to asset freezes and seizures.
Industry executives and policymakers are concerned about the geopolitical hazards of centralized stablecoins, as described by Curve Finance's inventor.
On Oct. 25, The Wall Street Journal reported that USDt issuer Tether was under investigation by US authorities for violating anti-money laundering rules and penalties.
Tether CEO Paolo Ardoino refuted the charges and listed USDT's reserve assets.
At the Plan B event in Lugano, Switzerland, the Tether CEO also warned that banks reserve requirements under the EU's Markets in Crypto-Assets Regulation (MiCA) represent systemic dangers for crypto and financial institutions.
Ardoino said that MiCA laws compel stablecoin issuers to maintain at least 60% of their deposits in licensed banks, which may lend 90% of those assets to customers and generate considerable deposit risk for stablecoin enterprises in the case of bankruptcy or bank collapse.
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