The global crypto market has experienced the most dramatic "black swan" event so far this month—an unexpected and severe fluctuation in the stablecoin market, with some major stablecoins briefly losing their pegs, triggering panic selling and a chain reaction across the market. Following the incident, Tether's USDT quickly initiated large-scale issuance to stabilize market liquidity, while Citigroup CEO Jane Fraser emphasized the "huge potential of tokenized deposits" in a public appearance on October 14, indirectly suggesting that the current market focus on stablecoins may be "overblown."
I. Stablecoins Lose Peg, Market Confidence Collapses Instantly
1. Stablecoins: The "Trust Cornerstone" of the Crypto Ecosystem
As a key bridge connecting traditional fiat currency and the crypto asset market, the core value of stablecoins lies in their "1:1 peg to the US dollar," providing investors with a relatively stable trading medium and a hedging tool. However, once this pegging relationship is disrupted, market confidence can quickly collapse, potentially triggering systemic panic.
2. Abnormality: Stablecoins Briefly Lose Peg
According to real-time monitoring, in the early hours of October 11, 2025, several stablecoins showed significant deviation from their dollar peg. USDT briefly dropped to $0.965 on some CEXs, USDC was quoted below $0.99 on certain platforms, and DAI once fell below $0.98. Although these depegging phenomena did not occur simultaneously across all platforms, and prices on major platforms such as Binance and Coinbase were quickly corrected, the short-term price deviations were enough to trigger chain reactions in algorithmic trading and leveraged strategies.
Market data shows that on that day, the total crypto market capitalization evaporated by over $280 billions, with bitcoin (BTC) plunging to a low of $101,500, ethereum (ETH) dropping to $3,355, and several altcoins falling by more than 80%.
3. Market Reaction: Liquidity Crunch and Crisis of Confidence
Although this depegging event did not cause a systemic crisis like the "LUNA crash" in 2022, its impact on market confidence should not be underestimated. Some institutional investors began to question the "stability" of stablecoins, especially among user groups that rely on stablecoins for asset reserves, trading hedges, and cross-chain bridging.
II. Tether Steps in to Stabilize, Market Liquidity Supplemented
In the face of violent market fluctuations, Tether (USDT), the leading issuer in the stablecoin sector, quickly activated its emergency mechanism, launching large-scale USDT issuance on the morning of October 11 to ease the market's liquidity crunch. In a subsequent official statement, Tether said: "This issuance is in response to market demand, ensuring that global users have sufficient stablecoin liquidity and maintaining the stable operation of the crypto ecosystem." The market generally believes that Tether's rapid response effectively curbed the further spread of panic, preventing larger-scale chain liquidations and a collapse of trust. Notably, in the past 30 days, Tether has minted a total of 11 billions USDT.
Some industry insiders have questioned Tether's "issuance to save the market" model, arguing that it essentially fills short-term liquidity gaps by expanding supply, which in the long run may exacerbate the "trust dependency" and "centralization risk" of the stablecoin market.
III. Huge Potential for Tokenized Deposits, Stablecoin Focus May Be "Overblown"
While market sentiment had not yet fully recovered, Citigroup CEO Jane Fraser delivered a speech at the New York Fintech Summit on October 14, focusing on the development prospects of "tokenized deposits" and warning against the current market's excessive focus on stablecoins. Fraser pointed out: "Tokenized deposits—that is, converting traditional bank deposits into digital tokens that can circulate on the blockchain—have huge potential to reshape the global payment system and financial infrastructure. They can not only improve capital flow efficiency but also provide financial institutions with new risk management and compliance tools."
She further emphasized: "The current market focus on stablecoins may, to some extent, have exceeded their actual function and risk-bearing capacity. Although stablecoins are an important part of the crypto ecosystem, their original design was not to replace traditional fiat currency or bank deposits, but to serve as a transitional tool."
Fraser's remarks are seen by the market as an important statement from the traditional financial sector on the "demythologization" of stablecoins. She implied that although stablecoins play a key role in the crypto market, their long-term value and stability still heavily depend on the credit of the issuing institution, the soundness of the regulatory framework, and the robustness of market infrastructure.
IV. The Role, Risks, and Future Positioning of Stablecoins
1. The Essence of Stablecoins: Trust-Driven, Not Technology-Driven
The ability of stablecoins to achieve "fiat pegging" essentially relies on the credit endorsement of the issuer and the management of reserve assets, rather than blockchain technology itself. Taking USDT as an example, whether it truly has sufficient dollar reserves behind it has long been a focus of market controversy. Although Tether has released multiple audit reports, its transparency and independence are still widely questioned.
2. Regulatory Pressure Continues to Increase
Since 2023, major global economies have continuously strengthened regulation of stablecoins. The US Treasury, SEC, CFTC, and other agencies have repeatedly issued warnings regarding the compliance, anti-money laundering (AML), and consumer protection issues of stablecoins. The EU's "Markets in Crypto-Assets Regulation" (MiCA) explicitly brings stablecoins under strict regulatory scope, requiring issuers to hold sufficient fiat reserves and undergo regular audits.
The depegging event on October 11 once again highlighted the vulnerability of stablecoins under extreme market conditions and sounded the alarm for global regulators. In the future, stablecoin issuers may face stricter capital adequacy requirements, reserve transparency standards, and emergency liquidity management regulations.
3. Tokenized Deposits: The "Cryptofication" Attempt of Traditional Finance
Unlike stablecoins, tokenized deposits are digital assets issued by traditional banks or financial institutions based on blockchain technology, directly corresponding to real bank deposits. Such assets not only have the instant settlement and programmability features of blockchain but also enjoy clear regulatory protection and credit support within the traditional financial system.
International banking giants such as Citigroup, JPMorgan, and HSBC have in recent years been actively exploring application scenarios for tokenized deposits, including cross-border payments, supply chain finance, and securities settlement. Fraser's statement is, in fact, a public endorsement and promotion of this trend.
V. What Should Stablecoins Be Pegged To?
While chasing the hype of stablecoins and crypto innovation, one should not overlook the deep foundation of the traditional financial system in asset security, compliance management, and risk control.
The future of stablecoins may not lie in whether they can completely replace fiat currency or become an independent store of value, but in whether they can truly become a "trusted bridge" connecting traditional finance and the crypto ecosystem, based on compliance, transparency, and trust.
For investors, in the face of short-term volatility and long-term uncertainty of stablecoins, maintaining rationality, diversifying risk, focusing on underlying assets and regulatory trends will be key to navigating this complex market.
