Taken together, the major dollar stablecoin issuers hold a bill portfolio that would place them among the ten largest foreign official holders of US government paper. Unlike those holders, their liabilities are redeemable same-day, at par, by anyone with an internet connection.
This is a maturity-matched book, which is the good news. It is also a book with no lender of last resort and no deposit insurance, which is the rest of the news.
In an orderly market this is simply a money market fund with better distribution. In a disorderly one, the redemption mechanism is a same-day forced seller into the shortest, deepest, most reflexive part of the curve.
The bills are safe. The question was never the bills.
Regulators have converged on reserve-composition rules and largely ignored redemption-gate design, which is the parameter that actually determines whether a run transmits into the collateral market.
