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Dojeocoin Insider Warns: Holding Stablecoins Like USDT May Be Risky
Dogecoin insider Mishaboar has sent an open letter to the community, advising against holding stablecoins like USDT, USDC, and even PYUSD. According to him, these assets are inherently risky and can harm holders.
Bitcoin, Litecoin, and Dogecoin for Stablecoins
In his post on X, Mishaboar noted that these stablecoins are risky for many reasons. First, there is always the possibility of their backing or reserve asset collapsing. This is one of the most controversial subjects in the industry.
Besides the issue of reserve collapse, the Dogecoin insider noted that these stablecoins are highly centralized. Specifically, he named USDT and USDC, the two biggest in the industry. With PayPal’s stablecoin PYUSD gaining traction, he added this to the list. He claimed that entities behind these assets, including Tether, Circle, and PayPal, could freeze users’ assets if they are asked to.
Dear #Dogecoin community, as I have repeated countless times:
holding “stable” coins like USDT or USDC or PYUSD is inherently risky. Not just in the (always possible) case of a catastrophic collapse of whatever castle of cards or institution is backing them.
They are risky assets…
— Mishaboar (@mishaboar) October 25, 2024
Despite the roles of stablecoins in the market, Mishaboar believes holding Bitcoin, Dogecoin, Litecoin, and Monero is better. He claims that, though provocative, Monero is much less risky overall. Against the core positions of most crypto proponents, Mishaboar also advocates for holding fiat currencies with real value, which he believes are comparatively safer.
Will Stablecoin Regulation Help?
Some of the concerns voiced by the Dogecoin proponent are largely what regulations can fix. Notably, Tether CEO, Paolo Ardoino, has called for stablecoin regulation in the United States as a trusted framework is still missing.
The centralization risks can also be addressed with the right rules. Thus far, regions like the European Union have introduced Markets in Crypto Assets (MiCA) to guide stablecoin issuance.
The collapse of Terra-linked algorithmic stablecoin USTC underscores the fears from Mishaboar. With over $40 billion lost, regulators around the world are now making moves to prevent a recurrence. Earlier this year, US regulators unveiled a regulation to ban algorithmic stablecoins.
According to proponents, if the industry works together, some of these pain points may be properly addressed.
FAQs
- What does Mishaboar recommend? Based on his recent post, Mishaboar recommends holding Bitcoin, Litecoin, and Dogecoin instead of stablecoins like USDT, USDC, and PYUSD.
- Why does Mishaboar think stablecoins are risky? According to Mishaboar, stablecoins are risky because of the possibility of reserve collapse and their high level of centralization.
- What is the alternative to stablecoins? According to Mishaboar, holding fiat currencies with real value, such as Bitcoin, Litecoin, and Dogecoin, is a safer option.
- What is the current regulator landscape? Regions like the European Union have introduced regulations, such as Markets in Crypto Assets (MiCA), to guide stablecoin issuance, while US regulators have unveiled a regulation to ban algorithmic stablecoins.
Conclusion
Mishaboar’s warning highlights the potential risks associated with holding stablecoins like USDT, USDC, and PYUSD. While stablecoins have their uses, the industry must be aware of these risks and work toward building a safer and more transparent ecosystem.