What to know:
- European regulators are intensifying scrutiny of private stablecoins as institutional investors warn that leading tokens like Tether and USDC do not function as true fiat-pegged cash equivalents.
- Christoph Hock of Union Investment argued that the reserve structures of USDT and USDC, which include large holdings of gold and bitcoin, make them resemble speculative hedge funds rather than stable, low-risk instruments.
- Hock warned that recent USDC de-pegging episodes, including a 13% drop, show that stablecoins can inflict catastrophic mark-to-market losses on corporate treasuries and asset managers who use them for supposedly safe, overnight cash settlement.
Experts at the Digital Money Summit 2026 in London said that private stablecoins are getting a lot more attention from regulators in Europe, who are increasingly focused on controlling digital assets that aren’t officially authorized.
As a researcher looking into stablecoins, I’ve been examining the reserves that companies like Tether and Circle use to back their dollar-pegged tokens. What I’ve found is that these reserves don’t function like a traditional, stable backing system. Christoph Hock, who leads Tokenization and Digital Assets at Union Investment – a major German asset manager with around $620 billion under management – agrees. He points out that these reserves actually behave more like a speculative investment fund than a reliable, fixed peg to the U.S. dollar.
I don’t really consider what most people call stablecoins to be truly stable,” explained Hock. “We talked about Tether and USDC, and when you look at what they invest in—Tether, for example—they hold a lot of gold and bitcoin.”
As someone who invests in crypto, I found Hock’s comments really interesting. He’s focused on how asset managers are using tokens, and he pointed out that stablecoins like USDT and USDC are starting to look a lot like hedge funds. He’s concerned – and frankly, so am I – that the way these stablecoins are structured could be risky for people holding them. It’s something to keep a close eye on, as it could definitely impact our investments.
He pointed out that, like with USDC, these companies might eventually need a bailout funded by taxpayers. He referenced Circle’s recent issue where its value dropped by 13%, highlighting the significant danger this poses to investors, especially those from institutions.
In March 2024, the value of USDC briefly fell to 74 cents three times due to a broad market sell-off. This happened when someone traded USDC for USDT and there wasn’t enough available to keep its price at $1. A similar situation occurred a year earlier when USDC’s price dropped 13% to 87 cents, and transaction fees on Ethereum spiked, shortly after a bank connected to cryptocurrency failed.
Hock questioned Tether’s move to invest heavily in gold and bitcoin, stating that it introduces market risk to their corporate funds. He believes this essentially turns a stablecoin issuer into a risky investment firm.
As of January 2026, Tether is expected to hold 148 tonnes of gold, worth approximately $23 billion. This amount places them among the top 30 gold holders worldwide, exceeding the reserves of many countries.
According to Hock, a sudden 13% loss in value for stablecoins would be devastating for companies and fund managers who use them for short-term cash transactions. He stressed that institutional investors can’t tolerate this kind of risk, and criticized stablecoins for failing to deliver on their basic promise of maintaining a stable value tied to traditional currencies.
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2026-05-19 23:47