A US Fed high-ranking official has taken a dig at stablecoins, particularly USDT, tagging it a risk to the equilibrium of the financial system.
President of the Federal Reserve Bank of Boston, Eric Rosengren, mentioned Tether (USDT) on the list of “financial stability challenges” during a slide exhibition yesterday and claims the US central bank is closely monitoring the situation.
As if that wasn’t resounding enough, Rosengren, emphasized his points during a talk with Yahoo Finance later on Friday.
“The reason I talked about Tether and stablecoins is if you look at their portfolio, it basically looks like a portfolio of a prime money market fund but maybe riskier,” Eric Rosengren said.
(Tether) “has a number of assets that, during the pandemic, the spread got quite wide on those assets.” he continued.
“I do think we need to think more broadly about what could disrupt short term credit markets over time, and certainly stablecoins are one element,”
Rosengren expressed his worry about the stable coin market: “I do worry that the stablecoin market that is currently, pretty much unregulated as it grows and becomes a more important sector of our economy, that we need to take seriously what happens when people run from these type of instruments very quickly.”
USDT remains the biggest stablecoin on offer based on market capitalization despite all the contentious talks about it.