The Tether (USDT) stablecoin threatens the stability of the financial system, according to Eric Rosengren, president of the Federal Reserve Bank of Boston. In one slide of his presentation, he called the token “a new destroyer” of the short-term lending market.
On the day of the presentation, June 25, Rosengren expanded on his position in an interview Yahoo Finance.
“If you look at their [stablecoins’] portfolios, they look like the portfolios of the primary money-market fund, but perhaps riskier,” said the president of the Boston Fed.
He added that Tether holds a wide array of assets, the spreads of which widened enough during the coronavirus pandemic.
“We should think more broadly about what could disrupt the market for short-term lending. Of course, stablecoins are one element,” said Rosengren.
He also expressed concerns about the lack of regulation in the stablecoins market, which, he said, “is becoming an increasingly important sector of the economy”.
“We should take seriously what happens when people rush to exit these instruments,” added Rosengren.
As of writing, Tether’s market capitalization stands at $63 billion, according to CoinGecko.
At the end of May, the aggregate capitalization of stablecoins surpassed $100 billion.
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