Experts have warned of the risks of Tether’s collapse for the US financial system

According to a new Bank for International Settlements (BIS) working paper, the collapse of a major issuer of stablecoins, such as Tether, could cause instability in the world’s largest U.S. Treasury bond market. Experts warn that a massive outflow of funds could trigger “non-linear effects” and a large-scale sell-off of short-term securities.

The researchers note that even in calm conditions, the withdrawal of funds from stablecoins has two to three times more impact on the yield of three-month bonds than their inflow. This indicates the high vulnerability of the system in case of crisis situations. If deposits are withdrawn en masse, the effect can intensify parabolically, leading to rising yields and falling prices.

The U.S. Treasury securities market is worth $29 trillion and gross government debt exceeds $37 trillion. Against this background, stablecoins, with a total capitalization of $268 billion, seem a relatively small factor. Nevertheless, the BIS emphasizes that their impact is “already measurable” and may be underestimated due to analysis in a stable market.

Special attention is paid to Tether and Circle as the largest issuers. The researchers warn: if one of them collapses, volatility could quickly spiral out of control, causing turbulence in the government bond market. This would be an unprecedented challenge to the US financial system.

The issue became political: Donald Trump said in his speech on July 18 that stablecoins strengthen the dollar and national security. He emphasized that digital assets are becoming an important tool for maintaining U.S. leadership in the global financial system.

So far the influence of stablecoins on profitability is estimated within 2-2.5 basis points – less than 0.03%. However, analysts warn that this indicator may sharply increase under stress scenarios.