Opinion: Even hoarding large amounts of US Treasury bonds cannot prevent Tether and Circle from facing a sudden liquidity crisis.

CoinFeed reported on May 20th, citing CoinDesk, that Christoph Hock, head of digital assets and tokenization at Union Investment, one of Germany's largest institutional asset management firms, stated that the reserve structures of Tether and Circle's stablecoins resemble speculative funds rather than genuine fiat currency anchors. Even holding large amounts of US Treasury bonds cannot protect them from sudden liquidity crises. Hock pointed out that Tether holds significant amounts of gold and Bitcoin, making USDT and USDC more like hedge funds, and their token economies are fragile, potentially impacting the financial interests of holders. He recalled the decoupling event that caused USDC to plummet 13%, stating that stablecoins could lead to catastrophic market capitalization losses for corporate treasuries and asset management companies that rely on them for overnight cash settlements.