March 7, 2026
Everyone treats USDT and USDC like they're equivalent to having actual US dollars. They're not. Not even close.
USDT is backed by Tether's word and some banks they've kinda worked with. The company has been sued, investigated, and generally sketchy more times than I can count. Are they insolvent? Probably not. But are they definitely backed 1:1? Who knows. They won't let anyone do a proper audit.
USDC is better (Coinbase + Circle), but it's still just an IOU. You're trusting that the company actually has $1 in a bank account for every USDC in circulation. Probably true, but if Circle goes under tomorrow, your funds are in the same legal mess as any other bankruptcy.
Then there's the technical risk. Stablecoins exist on blockchains. If the blockchain gets attacked or has issues, your "stable" asset can become very unstable very quickly. Remember UST? Sure, that was an algorithmic stablecoin, but the point stands.
And let's not forget the regulatory risk. Governments are absolutely coming for stablecoins. The EU already did. The US is working on it. Tomorrow, governments could freeze stablecoin contracts, blacklist addresses, or just ban them entirely.
So why use them? Because they're the least bad option we have. They're way more liquid than actual dollars on-chain. They integrate with DeFi in ways actual dollars don't. They're useful, even if they're not actually stable.
Just don't pretend they're risk-free. They're not.