Written by Sharyn Tan
(Views are my own)
Thesis: Stablecoins promise instant, low-cost, 24/7 settlement that traditional correspondent banking cannot match. But there’s a catch—you’re trading the credit risk of regulated banks for a mix of private issuers, offshore entities, and smart contracts. However, we’re not debating whether stablecoins will land on corporate balance sheets – they already have. The real question: Is the risk framework mature enough for this to be permanent?
The Optimist Case – Why Treasurers Can Get Increasingly Comfortable
- Transparency has improved dramatically
- USDC (Circle) and PYUSD (Paxos) provide monthly attestations by Big-4 accounting firms, with granular breakdowns by asset type and custodian.
- Tether (USDT), despite its historical opacity, has moved to quarterly attestations (Grant Thornton) and now publishes a daily reserve dashboard.
- On-chain proof-of-reserves (e.g., Circle’s real-time attestation portal, Paxos transparency reports) may give treasurers verifiable reserve data in near real-time.
- Legal claims have a structure
- Regulated issuers like Circle and Paxos operate under state trust charters that ring-fence customer assets. In bankruptcy, you may have stronger claims than uninsured bank deposits.
- Remember Terra/Luna? That algorithmic disaster actually validated fiat-backed stablecoins. When SVB collapsed in March 2023, USDC briefly de-pegged—then recovered in hours once FDIC clarity emerged. The system worked
- Institutional-grade options are emerging
- Tokenized bank deposits (e.g., JPM Coin, Societe Generale’s EURCV, BNY Mellon’s efforts) offer the credit profile of the issuing bank with the speed of blockchain settlement
- Yield-bearing stablecoins or tokenized assets backed by short-duration U.S. Treasuries (e.g., Ondo OUSG, Mountain Protocol’s USDM, BlackRock BUIDL) are giving treasurers a positive carry option
- Risk is quantifiable Treasury teams already segment cash by counterparty risk (Tier 1 banks vs. regional banks vs. money-market funds). Stablecoins are simply a new tier. Corporates could develop “stablecoin scorecards” looking at:
- Reserve composition & custodian credit quality
- Regulatory oversight of issuer
- Redemption rights and bankruptcy remoteness
- Historical de-peg behavior
- This is exactly how treasurers have always managed counterparty/credit risk — just with new data sources.
The Skeptical Case – Why Treasurers and CFOs stay nervous
- Attestation ≠ Audit Big-4 attestations are agreed-upon procedures (AUPs), not full audits. They confirm that reserves existed at a point in time but do not test internal controls over an extended period. Tether’s refusal to provide a full audit ? Still a red flag.
- Custodian concentration risk USDC and USDT cash reserves sit with a small group of U.S. banks and a few offshore banks. SVB proved the point: even “safe” stablecoins can break when the banking system seizes up. Concentration risk hasn’t disappeared—it’s just moved.
- Offshore legal limbo USDT is issued by a BVI entity with reserves in multiple jurisdictions. In a real crisis, U.S. or European treasurers may discover that their legal claim is weaker than they assumed.
- Smart-contract & oracle risk Perfect reserves don’t matter if a bug locks redemptions or an oracle fails. See Circle’s 2023 blacklist incident.
- Regulatory roulette The GENIUS Act created a federal framework—but key rules are still being written. MiCA in Europe looks clearer, but most stablecoins stay unregulated until 2026. What happens in between?
- No government backstop FDIC insurance? Nope. Fed rescue in a crisis? Unlikely for a private issuer. When the system breaks, you could be on your own
A Treasurer’s Take: It’s not a binary choice between “all-in on stablecoins” and “never touch them.” Why not define tiered policies – something like:
- Tier 0: Traditional insured deposits and 2a-7 or equivalent money-market funds (lowest yield, highest safety)
- Tier 1: Tokenized deposits from G-SIBs (e.g., JPM Coin, Citi, DB, BNY) – essentially bank credit risk on-chain
- Tier 2: Regulated fiat-collateralized stablecoins (USDC, PYUSD, GUSD) – used for intra-day liquidity and cross-border payments, with strict limits
- Tier 3: Higher-yielding Treasury-backed products (Ondo, USDM) – treated like short-duration bond exposure
- Tier 4: Everything else (USDT, DAI, algo-coins) – generally prohibited or limited to sophisticated trading desks only
I suspect for most treasurers at large corporates, the “comfort threshold” for mass adoption looks like this:
- Full GAAP audit (not just attestation) from a Big-4 firm
- 100% of reserves in cash + short-duration U.S. Treasuries or insured deposits
- Clear bankruptcy-remote structure with direct customer claim acknowledged by U.S. courts
- Real-time, on-chain proof-of-reserves signed by the issuer
- Explicit inclusion in a federal or state-level protection scheme (or at minimum, a Fed master account for the issuer)
- Secondary-market liquidity depth comparable to major FX pairs
The bottom line
Counterparty and credit risk have not disappeared with stablecoins — they’ve been reallocated. The question to ask is not “Is this as safe as a bank?” but “Do I understand this risk well enough to size it, diversify it, and get paid for taking it?”
The industry is moving fast: better disclosure, better regulation (MiCA, Singapore, UAE, Hong Kong frameworks), better legal structures, and better on-chain transparency tools. Skeptics are right to demand more. Optimists are right that the tools to manage this risk already exist — and are improving quarter by quarter.
The treasurer’s job hasn’t changed since the era of commercial paper and eurodollar deposits: understand the credit, diversify the counterparties, and stay within risk appetite.
The medium changed. That discipline has not.
So where do you stand? Are you evaluating to put stables on the balance sheet with a 2–5% limit, or still in the “observe only” camp?
Also Read
- Stablecoins vs. Tokenized Deposits: The right debate?
- On-Chain Settlement: Beyond the Hype and Into the Messy Middle
- From Static Cash to Symphonic Liquidity: Orchestrating the Future with Stablecoins
- Prefunding — The Silent Cost of Speed
- The Stablecoin Reality Check: Unlocking Liquidity or Just Relocating the Traps?
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