The Fed Is Worried About the Most Boring Part of the Crypto Market

Unlike crypto critics who attack bitcoin and other cryptocurrencies for being too volatile, the Federal Reserve is increasingly sounding the alarm over investigating the coins that set out to be far more boring: stablecoins.

As their name suggests, stablecoins are cryptocurrencies that set out to remain stable over their lifetimes and try to maintain a value as close to $1 (or other base currencies) as possible.

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Tether, the largest stablecoin in the world with a market cap of more than $60 billion, originally purported to be backed 1-for-1 by cash holdings. Earlier this year, after a settlement with the New York Attorney General’s office, it was revealed to only have about 5% of its collateral in cash. Most of its portfolio is actually invested in commercial paper, or short-term corporate debt, making Tether similar to a prime money market fund in the eyes of some Fed officials.


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