The Wall Street Journal Warns of Structural Risks in Stablecoins as Private Currency
The Wall Street Journal points out that stablecoins are essentially "private currencies". Although the GENIUS Act and the CLARITY Act aim to promote compliance, they may still pose structural risks to the financial system.
Stablecoins attempt to combine the stability of the dollar with the efficiency of blockchain, but due to their operation on fragmented private infrastructure and lack of uniformity in the traditional dollar system, USDT and USDC may still deviate from the $1 peg.
Issuers have incentives to scale up and pursue profits, which may lead to the allocation of high-risk assets. Once their value declines, it could trigger a run on redemptions. According to Chainalysis, stablecoins account for 84% of illegal activities in crypto, and they are currently mainly used for crypto trading, with real economic payments making up less than 1%.
Source: Public Information
ABAB AI Insight
The Wall Street Journal has previously analyzed crypto regulation multiple times, and this time it compares stablecoins to the private currency experiments of 19th-century American free banking, continuing its long-standing warning about the potential systemic risks of privately issued currencies without sufficient backing.
In terms of capital pathways, stablecoin issuers like Tether and Circle are pursuing higher yields through reserve asset allocation while lobbying for regulatory bills to legitimize their expansion, whereas traditional banks and central banks are trying to maintain monetary sovereignty control through stricter access.
Similar to the run events of multiple private bank notes during the 19th-century American free banking era, and the recent collapse of TerraUSD, stablecoins are currently in a phase of transitioning from internal crypto tools to potential mainstream payment infrastructure while facing tightening regulation.
The essence belongs to regulatory changes: stablecoins as private currencies challenge the central bank's monopoly on currency, driven by their high efficiency and yield incentives for rapid expansion. However, fragmented infrastructure and risk mismatches can easily trigger a crisis of confidence, forcing regulation to shift from leniency to requiring higher reserve transparency and deeper access to central banks to prevent systemic risk spillover.
ABAB News · Cognitive Law
Private currencies pursue efficiency, ultimately needing to pay taxes to central bank regulation.
The greater the yield incentive, the more concealed the risk of a run.
Technology can innovate forms, but it cannot change the essential laws of currency trust.