Bitget CEO: "Stablecoin Collapse More Dangerous than Bitcoin Plunge"

Gracy Chen, CEO of Bitget, recently expressed concerns that a collapse of stablecoins could cause a greater shock, in relation to the recent stablecoin depegging issue.

Previously, Justin Sun, founder of TRON, raised concerns about the repayment ability of First Digital Trust (FDT), the issuer of the stablecoin FDUSD, leading to a temporary depegging of FDUSD below one dollar.

On the 4th, CEO Chen stated on her X (formerly Twitter), "The volatility of Bitcoin is already a familiar area for the market, but the collapse of stablecoins is a problem that shakes the foundation of the market." She pointed out that "the collapse of stablecoins threatens almost all crypto financial infrastructures, including cryptocurrency trading, DeFi (decentralized finance), remittances, and settlements." She explained that a collapse of stablecoins could lead to liquidity crunches and systemic risks in the industry.

She continued, "The recently troubled stablecoins quickly recovered their peg, but there was a lack of core information such as reserve composition or audit results. The market falls into fear due to lack of information."

She added, "The perception that stablecoins backed by real assets are safe and only algorithm-based stablecoins are risky is outdated," stating, "Any structure can be risky if transparency of reserves, liquidity, and real-time accountability of the issuer are not ensured."

She emphasized, "Currently, Tether (USDT) and USDC are working relatively well, but decentralized and auditable stablecoin models like DAI should also be considered as a supplement," adding, "Stablecoins are not simply maintained by collateral. The market must clearly know where the collateral is and how quickly it can be accessed."

Chen said, "In the crypto market, a 'black swan (unexpected variable)' does not knock. It breaks down the door. The important thing is not whether another shock will come, but whether we are prepared for that moment."