Stablecoins’ Unique Risk Profile Separates Them from Bank Deposits and Money Market Funds ✅
A new policy paper by Paradigm, written by former Federal Reserve Board analyst Brendan Malone, highlights that stablecoins differ significantly from bank deposits and money market funds in terms of #risk .
#Stablecoins ' lower risks are attributed to their reserve assets, typically short-dated #Treasurys , being segregated from the issuer's assets, minimizing duration mismatches.
Unlike money market funds, stablecoins primarily serve as a means of payment or transactions based on the U.S. dollar peg, offering no return on reserves to holders.
Proper federal regulation can ensure specific safeguards, making stablecoins distinct from traditional financial instruments in risk and purpose.
