Delphi Digital: Even if stablecoins have sufficient collateral, it does not mean they are immune to potential bank runs

Crypto World News reports that Delphi Digital tweeted, “Tether and Circle are not foolproof systems. Just because they are backed 1:1 by short-term government bonds and cash equivalents doesn’t mean they are immune to potential runs. As early as the collapse of Silicon Valley Bank (SVB) in early 2023, signs of this risk emerged with the USDC de-pegging incident. USDC was originally fully backed, but when SVB collapsed, some reserves became temporarily inaccessible. This means the risk was simply transferred upward. In traditional banking, payment risks are usually spread across institutions, but in the stablecoin system, payment channels may be deterministic and automated. However, this also means that settlement risks, which were once eliminated among participants, are now concentrated at the issuer level. The system hasn’t become risk-free; instead, it has shifted into a vertically dependent structure. This is the fundamental reason why issuer concentration is beginning to raise concerns.”