Deciphering stablecoins: A financial stability risk?

Elliot Gulliver-Needham
clock • 6 min read

Stablecoins have increasingly become part of the cryptocurrency ecosystem. Tether, the most popular stablecoin, is also the most traded cryptocurrency, with several billion dollars of it circulating daily.

Unlike normal cryptocurrencies, stablecoins are pegged to a fixed amount - normally the dollar - either through backing with assets or an algorithmic process. Therefore, they have little use as a speculative asset class. So why should institutional investors be interested in stablecoins, and why are regulators such as the Bank of England so worried about them? Stablecoins have increasingly attracted attention from regulators, with BoE governor Andrew Bailey saying last year that he was "sceptical" that stablecoins could ever be a safe asset. Last week, a consultation paper suggested the ...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Alternatives

FCA's Rathi calls for new approach to UK private markets to boost competition

FCA's Rathi calls for new approach to UK private markets to boost competition

Investment Association annual dinner

Sorin-Andrei Dojan
clock 30 October 2024 • 2 min read
Schroders-Phoenix joint venture gains approval for UK and global private markets LTAFs

Schroders-Phoenix joint venture gains approval for UK and global private markets LTAFs

Future Growth Capital

Valeria Martinez
clock 21 October 2024 • 1 min read
Carr Consulting's Matthew Morris: Bitcoin's El Salvador evolution

Carr Consulting's Matthew Morris: Bitcoin's El Salvador evolution

In 2021, El Salvador became the first country in the world to adopt bitcoin as legal tender, alongside the US dollar.

Matthew Morris
clock 14 October 2024 • 3 min read
Trustpilot