Stablecoin Warning: Expert Highlights Tether’s Risks and XRP’s Bigger Role

Stablecoins have quietly become the backbone of the crypto economy, but their growing influence now raises serious concerns far beyond digital assets. What started as a simple tool for moving money between crypto trades has evolved into a powerful force tied to U.S. Treasury markets, institutional liquidity, and the broader structure of the global financial system.

Crypto commentator Digital Asset Investor recently brought fresh attention to this issue by sharing a video clip of former CIA contractor and financial author Jim Rickards discussing stablecoins, Tether, and Ripple. In his interview with journalist Julia La Roche, Rickards examined how stablecoin issuers operate, why they generate enormous profits, and how weaknesses in the system could trigger major disruption across both crypto and traditional finance.

Why Stablecoins Dominate the Crypto Market

Rickards explained that stablecoins differ from Bitcoin and XRP because they aim to maintain a fixed value, usually pegged to the U.S. dollar. Users deposit dollars and receive digital tokens like Tether, with the expectation that they can redeem those tokens later for the same value.

He described Tether as the “coin of the realm” in crypto because many investors use it as the main gateway into digital assets. Instead of buying Bitcoin directly with dollars, they often convert dollars into Tether first and then use that stablecoin to purchase Bitcoin or other cryptocurrencies.

This system keeps capital circulating inside the crypto ecosystem and gives stablecoin issuers enormous influence over market liquidity.

The Hidden Business Behind Tether

Rickards argued that stablecoin issuers benefit far more than users. Holders of Tether earn no interest, but issuers invest customer deposits into short-term assets such as U.S. Treasury bills and keep the returns.

With billions of dollars under management, this creates a highly scalable and extremely profitable business model. Rickards described it as close to free money for issuers.

His concern, however, focused on transparency. He noted that many stablecoin issuers do not provide full audits, making it difficult to verify whether reserves fully back outstanding tokens. He also referenced Tether’s past legal scrutiny, where disclosures showed significant reserves in commercial paper rather than only Treasury bills. Commercial paper carries more risk than government-backed Treasury bills, especially during financial stress.

Why a Stablecoin Panic Could Spread Fast

Rickards warned that if investors lose confidence in stablecoins, the consequences could extend far beyond crypto. A rush of redemptions would force issuers to sell massive amounts of Treasury bills quickly, creating stress in one of the world’s most important financial markets.

He also warned that fraud remains a serious risk, arguing that at least one major stablecoin operator could eventually face an FTX-style collapse.

While Digital Asset Investor emphasized Rickards’ brief mention of Ripple and XRP, the larger message was clear: stablecoins are becoming central to modern finance, and any failure in that system could trigger shockwaves across the entire market.

Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.

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