WSJ: Stablecoins could pose risk to financial system

The Wall Street Journal (WSJ) reported that while stablecoins are gaining attention as a tool for financial innovation, they could also introduce new risks to the broader economic system. The newspaper noted that although stablecoins are viewed as the next generation of financial infrastructure, historical experiments with private money have repeatedly led to financial instability and systemic risk. The report also highlighted an analysis suggesting that stablecoin issuers are incentivized to increase usage and incorporate high-yield assets to boost profits. This, combined with a potential liquidity crisis, could lead to a risk of bank runs. According to the WSJ, while the U.S. is currently developing a regulatory framework, experts believe that legislation alone cannot completely eliminate the structural risks of stablecoins. Meanwhile, data from Chainalysis indicates that stablecoins are involved in approximately 84% of illicit cryptocurrency activities, while their use for payments in the real economy accounts for less than 1%.