Why did Christoph Hock warn about Tether and Circle stablecoins?

Christoph Hock argued that major stablecoins like USDT and USDC behave more like speculative investment funds than pure digital cash equivalents. He said reserve exposure to assets like bitcoin and gold creates liquidity and valuation risks during market stress.

What concerns did Hock raise about stablecoin reserves?

Hock criticised reserve allocations that include volatile assets such as bitcoin and gold instead of only highly liquid cash-like instruments. He argued those holdings expose stablecoin issuers and users to mark-to-market losses during liquidity crises.

Why did Hock compare stablecoins to hedge funds?

He said the combination of Treasury bills, gold and bitcoin reserves resembles a “stealth hedge fund” structure rather than a fully stable fiat-backed product. The concern is that reserve assets could fluctuate significantly during stressed market conditions.

What happened during previous USDC depegging events?

USDC briefly fell to around $0.87 during the 2023 US banking crisis after concerns emerged over reserves linked to failed banks. Hock also referenced volatility episodes in 2024 as evidence of liquidity risks in stablecoin markets.

Why are institutional investors worried about stablecoin liquidity?

Corporate treasuries and large asset managers often use stablecoins for short-term settlement and cash management. Hock said sudden double-digit valuation swings could create unacceptable risks for institutions expecting stablecoins to behave like cash.

How large are Tether’s gold reserves?

According to the discussion, Tether held around 148 tonnes of gold worth roughly $23 billion as of January 2026. That would place the company among the world’s largest holders of the metal.

Does Tether also hold bitcoin reserves?

Yes, Hock specifically criticised Tether’s exposure to BTC alongside gold holdings. He argued those reserve choices increase volatility risk compared with purely cash-backed structures.

Why are regulators paying closer attention to stablecoins in Europe?

European regulators are intensifying oversight under the Markets in Crypto-Assets Regulation (MiCA). Authorities are increasingly focused on reserve transparency, liquidity management and the systemic risks large stablecoin issuers could pose to financial markets.

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Expert warns Tether and Circle face liquidity risks

Written by Isaac FrancisPublished May 20, 2026, 6:35 AM

Christoph Hock warned that major dollar-backed stablecoins including USDT and USDC remain vulnerable to liquidity shocks despite large holdings of US Treasury bills.

Speaking at the Digital Money Summit 2026 in London, Hock argued the reserve structures behind the stablecoins behave more like speculative investment funds than true fiat-backed cash equivalents.

“To be honest, a stablecoin, from my perspective, is not a stablecoin,”

Hock said, criticising the reserve allocations of Tether and Circle, particularly exposure to bitcoin and gold holdings.

Hock said those reserve assets expose stablecoin holders to mark-to-market volatility during stress events, comparing the structure to a “stealth hedge fund” rather than a low-risk digital dollar product designed for cash settlement and treasury management.

The comments come amid growing institutional scrutiny of stablecoins under Europe’s Markets in Crypto-Assets framework, with regulators increasingly examining reserve transparency, liquidity structures and systemic financial risks tied to large digital asset issuers.

Hock referenced previous depegging incidents involving USDC, including a sharp drop to around $0.87 during the 2023 US banking crisis and another period of severe volatility in 2024, arguing such events demonstrate the risks stablecoins could pose to institutional investors during liquidity crunches.

According to the discussion, Tether’s gold reserves were estimated at roughly 148 tonnes worth approximately $23 billion as of January 2026, placing the company among the world’s largest holders of the metal.

Hock argued that corporate treasuries and institutional asset managers using stablecoins for overnight settlement cannot tolerate sudden double-digit valuation swings, warning that such risks undermine the foundational promise of fiat-pegged digital assets.