Stablecoin Tether (USDT) threatens the stability of the financial system, according to Erin Rosengren, president of the Federal Reserve Bank (Fed) of Boston. In one of his presentation slides, he called the token the "new disruptor" of the short-term lending market.
On the day of the presentation, 25 June, Rosengren revealed his position further in an interview with Yahoo Finance.
"If you look at their [Stablecoin] portfolios, they look like core money market fund portfolios, but perhaps more risky," the Boston Fed president explained.
He added that Tether has many assets whose spread has become "quite wide" in the coronavirus pandemic.
"We should think more broadly about what could disrupt the short-term lending market. Certainly stabelcoins are one element," Rosengren said.
The Boston Fed president also expressed concerns about the lack of regulation of the stablocoin market, which he said was "an increasingly important sector of the economy".
"We need to take seriously the question of what happens when people run away from these instruments very quickly," Rosengren added.
At the time of writing, Tether is capitalised at $63bn, according to CoinGecko.