Federal Reserve Report: Stablecoins are prone to runs during special periods or “become a source of financial instability.”

Odaily Planet Daily News The Federal Reserve Banks of Boston and New York released a staff report comparing stablecoins such as USDT and USDC to money market funds. According to the report, stablecoins and money market funds follow similar patterns during their operation, and stablecoins may inject instability into the broader financial system. The report states: “Stablecoins are vulnerable to runs during widespread crypto market disruptions and extraordinary stress events. If stablecoins continue to grow and become more closely tied to major financial markets, such as short-term funding markets, they may would be a source of instability for the broader financial system." The researchers also pointed out that stablecoins appear to have a "$0.99" threshold. Once below this threshold, redemptions will accelerate and a run may occur. (Cointelegraph)