Chinese economists highlight stablecoin risks; link to UST collapse

Chinese financial experts highlight that stablecoins, although appearing stable, lack innovation and replicate existing deposits. Zou Chuanwei explains stablecoins are backed by low-risk assets, while Zhao Binghao warns their value can plummet under stress, as shown during the UST crisis.

Market reactions call for improved reserve models to ensure the stability of stablecoins. The collapse of UST has prompted a reevaluation of regulations, emphasizing the necessity for better auditing practices for reserves to restore confidence in stablecoin viability.