Stablecoins: Why “stable” Doesn’t Mean Stable

1. The Illusion of Stability

On October 2, 2025, the stablecoin USDe (Ethena) on Binance plummeted to $0.65 within hours — a 35% loss for a coin that was supposed to be worth exactly one dollar . No technical glitch. No hack. Just the market showing what “algorithmic stability” means in practice.

It wasn’t the first time. In March 2023, $3.3 billion of USDC reserves were frozen at Silicon Valley Bank (SVB) when the bank collapsed. USDC dropped to $0.87 — the world’s second-largest stablecoin lost over 13% of its value overnight. Circle, the issuer, needed three days and a government bailout to restore the peg .

And Tether’s USDT, the “safest” of all stablecoins? Polymarket bets put the probability of a USDT depeg in 2025 at 14–18%. That means: The market itself believed, with a chance of nearly one in five, that the world’s most widely used stablecoin would lose its dollar peg.

“Stablecoins won’t go mainstream in retail payments by 2026.” — Forrester Research, Predictions 2025

“Stability” in numbers:

• ✗ USDe (Ethena): Crash to $0.65 on Binance (October 2025) — 35% loss
• ✗ USDC (Circle): Depeg to $0.87 following SVB collapse (March 2023) — $3.3 billion frozen
• ✗ UST (Terra/Luna): Total collapse in May 2022 — $40 billion wiped out, Do Kwon arrested
• ✗ USDT (Tether): 14–18% probability of depegging according to Polymarket (2025)

The question is not whether a major stablecoin will lose its peg again — but when. And when it happens, the holders lose — while the issuers have long since pocketed their profits.

2. The GENIUS Act: Stablecoins Become Law

On July 18, 2025, President Donald Trump signed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) — the first comprehensive U.S. federal law regulating stablecoins. Public Law 119-27. It was the culmination of a lobbying campaign driven by Tether, Circle, and a new class of politically connected crypto companies.

What looks like consumer protection at first glance is, upon closer inspection, an architecture designed to maintain U.S. dollar dominance — financed by the entire world.

Key provisions of the GENIUS Act

Read the fifth line again: Issuers are not allowed to pay interest. However, the reserves consist of U.S. Treasury bonds, which currently yield 4–5%. Where does this money end up? With the issuers. By law.

3. Who holds U.S. government debt? The stablecoin bomb

The figures that follow are the reason this article exists. They show how stablecoins have evolved from a crypto phenomenon into a systemically important pillar of U.S. government financing .

Tether: The Invisible Creditor of the State

As of the end of 2025, Tether alone holds approximately $141.6 billion in U.S. Treasuries — making it one of the largest single holders of short-term U.S. government bonds worldwide. Larger than entire countries. A private, company registered in the British Virgin Islands holds more U.S. government debt than Germany.

Circle/USDC: BlackRock as custodian

Circle, the issuer of USDC, pursues a different but equally revealing strategy: Around $24.5 billion is invested in direct U.S. Treasuries, with another $40.6 billion held in reverse repo agreements — managed by the BlackRock Circle Reserve Fund , a money market fund established specifically for USDC reserves money market fund. BlackRock, the world’s largest asset manager, earns fees from managing these assets.

Stablecoins as Treasury Buyers — The Big Picture

• → Tether + Circle combined: ~$130 billion invested directly in T-bills
• → Share of the T-bill market: ~2.25% of the total short-term U.S. Treasury market ($5.8 trillion)
• → Standard Chartered forecast: Stablecoin market to grow to $2 trillion by 2028 — that means up to $1 trillion in new Treasury demand
• → U.S. Treasury Secretary Bessent: “Stablecoins could generate up to $2 trillion in additional Treasury demand.”

These figures are not a pipe dream. They describe what is happening right now: The U.S. stablecoin market has become the third-largest source of demand for short-term U.S. Treasury bonds — after the Federal Reserve and foreign central banks.

4. The Trojan Horse: How Non-Americans Finance U.S. Debt

This is where it gets geopolitical. And this is where the true design behind the “stability” becomes apparent.

Over 80% of all stablecoin transactions take place outside the U.S. In Turkey, Argentina, Nigeria, Brazil, Southeast Asia. People in countries with weak local currencies use USDT as a store of value — as a digital substitute for the dollar. They exchange their savings for Tether to protect themselves against inflation.

What happens here is a mechanism that the Brookings Institution has described as a “Trojan horse for U.S. debt ”:

5. The Trump Conflict of Interest

The story of the GENIUS Act would be incomplete without the elephant in the room: The president who signed the bill benefits directly from the industry it regulates.

World Liberty Financial (WLFI) — The Trump Family in the Stablecoin Business

• → The Trump family founded World Liberty Financial (WLFI) — a DeFi project that issues its own stablecoin USD1 →
• → According to public reports, the Trump family earned over $5 billion through their entire crypto portfolio (token sales, NFTs, WLFI)
• → On July 18, 2025 , Trump signed the GENIUS Act — which regulates precisely the market in which his own stablecoin operates

The revolving door between politics and industry

Even more controversial is the personnel overlap: Tether hired Bo Hines in the summer of 2025 — Trump’s former top advisor on digital assets and executive director of the Presidential Advisory Council on Digital Assets. Hines had previously been directly involved in drafting the GENIUS Act. He helped write the bill—and then moved to the company that stands to benefit the most from it.

“This bill does everything to enrich those in the president’s inner circle.” — Maxine Waters, Ranking Member, House Financial Services Committee (May 2025)

Ten Democratic senators who had originally supported the GENIUS Act temporarily withdrew their support and demanded stronger anti-corruption provisions. The final version included some concessions—but no explicit ban on government officials from the stablecoin business.

The President of the United States signed a law regulating the stablecoin market in which his own family is actively invested. In any other industry , this would be called a conflict of interest.

6. Europe: MiCA vs. GENIUS Act

Europe is watching these developments with growing unease. The EU has had its own regulatory framework for stablecoins in place since June 2024 with the Markets in Crypto-Assets Regulation (MiCA) . But the reality of the market is sobering.

“Dollar-pegged stablecoins are more dangerous than tariffs. They could undermine Europe’s monetary sovereignty.” — Giancarlo Giorgetti, Italy’s Minister of Finance (2025)

The numbers speak for themselves: 99% of all stablecoins are pegged to the dollar. Despite MiCA, there is no serious euro-stablecoin alternative. While the EU attempts to build a regulatory firewall, the U.S. is constructing a global digital dollar network—with Tether and Circle as infrastructure providers and the GENIUS Act as legal backing.

The irony: MiCA also prohibits euro stablecoin issuers from paying interest to holders. But while the U.S. uses this to subsidize its government financing, Europe doesn’t even have the stablecoins whose interest it could collect.

7. What this means for YEM

Now that we have laid bare the mechanics of the stablecoin industry, the question arises: Is there an alternative?

YEM is not a stablecoin. It does not attempt to replicate the dollar. And that is precisely where its fundamental difference from USDT, USDC, and USD1 lies.

The crucial point: Stablecoins are not a neutral technology. They are digital dollar hegemony, codified into law. Every USDT in the pocket of a Nigerian, a Turk, an Argentine is an interest-free loan to the U.S. government — brokered by a BVI company that earns billions from it.

YEM counters this dynamic. Not by copying the dollar system, but through a fundamental design difference: a currency that serves no state, gives no interest to any issuer, and leaves stability to no exchange.

The question is not “Is YEM stable?” — but rather: Whom does the “stability” of stablecoins serve?

Conclusion: The world’s most expensive “stability”

Stablecoins are not stable. They are pegged to the dollar — and the dollar is only as stable as the world’s willingness to finance U.S. debt. The GENIUS Act now enshrines this dependency in law.

What began as a crypto innovation has become the most efficient machine for financing U.S. government debt ever developed. No negotiations with central banks required. No diplomacy. No Congressional resolution for every single Treasury auction. Simply millions of people exchanging their savings for USDT and thereby—by law— buying U.S. Treasury bonds without even knowing it.

The beneficiaries are clear:

The U.S. government

Receives up to $2 trillion in new Treasury demand — without having to pay a single dollar in interest to the actual lenders.

Tether & Circle

Collect billions in interest on reserves consisting of your deposits. $10 billion in profit for Tether alone in 2025.

Politically connected insiders

From the Trump family with $1 to Bo Hines, who co-wrote the law and then became the biggest beneficiary.

And the losers? Anyone who holds a stablecoin and believes they have something stable. In reality, they hold an interest-free promissory note on the future of U.S. public finances — issued by companies that earn billions from it, and legitimized by a law that was co-drafted by the profiteers themselves.

“Stable” is the new “no alternative”— and just as costly.