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Nobel Prize-winning economist, Jean Tirole, warns retail investors of the hidden risks behind viewing stablecoins as “safe assets” considering it still has insufficient supervision. Summary Nobel Prize winner Jean Tirole warns that investors may gravitate towards riskier assets if U.S. government bonds fail to perform well. Stablecoin market cap rose by $16 billion in the past month to $280 billion, according to data from McKinsey. In an interview with Financial Times, 2014 Nobel laureate Jean Tirole warned retail investors that stablecoins could push governments into multibillion-dollar bailouts if the tokens pegged to fiat currencies end up unraveling in the future. “If it is held by retail or institutional depositors who thought it was a perfectly safe deposit, then the government will be under a lot of pressure to rescue the depositors so they don’t lose their money,” he said. Tirole, a professor at the Toulouse School of Economics, warned that as stablecoins are backed by fiat-based assets such as US government bonds, they could end up becoming unpopular because the underlying assets’ offers relatively low yields. The Nobel-prize winner brought up previous instances where the returns were “negative for a number of years” and payouts after inflation were even lower. Stablecoins are currently dominating the financial systems as more governments gravitate towards stablecoin regulations, especially countries like the United States with the Genius Act and Hong Kong with its Stablecoin Ordinance issuers’ license. They are expected to gain further popularity as more governments and institutions are jumping on the bandwagon. Stablecoin transaction volume for U.S.-pegged tokens | Source: McKinsey According to a McKinsey report, the stablecoin market cap recently hit an all-time high of $280 billion. The value increased by $16 billion in the past month alone, with Tether (USDT) leading the charge with 60% of the market cap share.…

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Filed under: News - @ September 1, 2025 10:28 am