Below is the Introduction to the Fact Sheet. Read the full Fact Sheet here.
The short history of stablecoins has been characterized by instability, bank-like runs, and the evaporation of tens of billions of dollars in investor losses. The use of the moniker “stablecoin” has become a misnomer in that these financial products are anything but stable. A more appropriate name would be “unstablecoins” considering how susceptible they are to bank-like runs and how often they depeg from their “stable” value.
Stablecoins are remarkably similar to money market funds – an industry that had to be bailed out by the federal government in 2008 and 2020 after experiencing bank-like runs. And despite industry fantasies and talking points touting stablecoins as an innovative and inclusive form of payment, stablecoins have not lived up to the hype as a payment mechanism outside the unregulated crypto ecosystem. In fact, more than 80 percent of the trade volume on major centralized exchanges involves stablecoins – demonstrating that their primary use case is simply trading activity for no purpose other than the pursuit of speculative profit.
However, despite their instability and lack of prowess as a form of payment, policymakers have debated codifying these money market fund-like products as a payment mechanism. For the reasons stated below, regulators and policymakers should stop and consider the risks to investors, consumers, and the economy before legislating stablecoins into a form of payments.
 Share of Trade Volume by Paid Denomination, The Block (last visited May 16, 2023), https://www.theblock.co/data/crypto-markets/spot/share-of-trade-volume-by-pair-denomination.