A new analysis warns that stablecoins may struggle to maintain their one-to-one value with the U.S. dollar because they lack direct access to the Federal Reserve and depend heavily on the quality of their reserves.
The report is part of a wider series examining myths about stablecoins. It focuses on the “singleness of money,” the idea that all forms of U.S. dollars should exchange at equal value. In the traditional banking system, deposits can be turned into physical cash at par because banks connect directly to the Federal Reserve.
Stablecoins do not have this connection. Issuers cannot hold a Federal Reserve master account, meaning stablecoins cannot convert into base money in the same way. This structural gap raises concerns about their ability to stay pegged to the dollar during periods of financial stress.
A recent paper from the Bank for International Settlements draws a comparison between stablecoins and eurodollars—U.S. dollars held in foreign banks that also lack direct access to the Federal Reserve. Eurodollars needed emergency support during past liquidity crises, highlighting the risks of money-like instruments operating outside central bank protection.
Lawmakers are attempting to introduce more safeguards. The GENIUS Act proposes bringing stablecoin issuers under rules similar to those used in traditional finance, including KYC/AML requirements and reserve holdings in high-quality liquid assets such as short-term Treasury bills.
However, the act still prevents issuers from holding Federal Reserve accounts and does not clearly define how par value should work during redemptions.
Although the legislation requires redemptions “at par” without excessive fees, the existence of any fees shows that stablecoins behave more like private money than bank deposits, which convert to cash without charge. Analysts say that while stablecoins offer fast settlement speeds, they remain exposed to liquidity risks and sudden loss of confidence.
History provides several warnings. In the 19th and early 20th centuries, privately issued dollars sometimes traded at discounts of up to 20%. More recently, during the Silicon Valley Bank crisis, the USDC stablecoin fell to 90 cents, showing that stablecoins can lose their peg under stress.
The report concludes that without direct support from the Federal Reserve, stablecoins will continue to face structural limits. Their long-term ability to maintain stable, one-to-one value remains uncertain as they expand into global finance.
