This is the most insightful perspective I've recently seen on the understanding of stablecoins.

Recently, the discussion around stablecoins has taken a noticeably different turn.
Neobank, DeFi Bank, Crypto Bank...
More and more names, but all narratives ultimately point to one thing: US dollar stablecoins.
Because of this, the debate about whether #Circle is worth investing in has been pushed to the forefront again.
On the surface, USDC is almost a perfect financial product:
Compliance, transparency, 1:1 reserve, backed by short-term U.S. Treasuries.
But if you look deeper into the underlying structure of the modern monetary system, you'll find—
It treads on a highly dangerous policy雷区.
First, let's clarify a key misconception:
Stablecoins are not bank deposits.
But the problem is—
What they are doing is approaching "bank deposits" infinitely.
How do traditional banks operate?
You deposit 100 USD into a bank:
The bank doesn't lock the 100 USD away
Instead, it keeps a small reserve
The rest is used for lending and investing
This is the fractional reserve system.
Through this mechanism:
100 USD can "multiply" into 500, 800, or even more credit money
The Federal Reserve can control economic conditions via interest rates and reserve requirements
👉 This is the key to the modern financial system.
The real "danger" of stablecoins lies here.
Now, let's consider a different scenario.
You exchange 100 USD for USDC:
Your money is held 1:1 in cash or short-term U.S. Treasuries
Not entering the bank lending system
Not participating in credit expansion
What happens then?
This 100 USD:
No longer "multiplies"
No longer amplifies
Just sits quietly,
Low risk + high liquidity + earning interest
This is the difference between M0 and M1.
And modern economies rely on expansion of M1 and M2.
From a financial perspective, this isn't an advantage,
But a systemic variable out of control.
If USDC really is better than bank deposits, what would happen?
This is the most crucial question.
Suppose more and more people in the future:
"USDC is safer, more convenient, and transparent than banks."
Then large-scale transfer of funds:
From banks → stablecoin wallets
The result is only one:
Bank deposits are drained
Lending capacity declines
Credit expansion is hindered
Money multiplier collapses
Central bank policy control fails
Lower interest rates? No one goes to banks to borrow
Higher interest rates? Stablecoin yields are higher
Money no longer listens to the central bank
What does this mean for the Federal Reserve?
👉 This is a threat to financial sovereignty.
That's why the Fed absolutely refuses to give stablecoins main accounts
What is a Master Account?
Simply put:
Having a master account
Allows direct access to the Federal Reserve clearing system
Equivalent to being recognized as a "quasi-bank"
But once this opens, the issues arise:
Stablecoins could become:
A "digital bank" parallel to the banking system
Unconstrained by reserve requirements
Not involved in monetary policy transmission
This effectively creates outside the central banking system,
A separate "pure reserve currency system."
Highly efficient.
But it would directly weaken the central bank's control.
👉 This is a red line in policy.
So, Circle seems very stable, but the core risk lies here.
I don't think Circle is a bad company.
On the contrary, it is now too compliant, too standardized.
But precisely because of this, it has already reached a major contradiction point in the financial system.
I don't recommend heavy holding of Circle, for very practical reasons:
1️⃣ Policy risk is "non-linear"
Currently, stablecoins are less than 1% of M2,
And are tolerable.
But once approaching 5%–10%:
Limits
Mandatory licensing
Restrictions on payment and savings scenarios
Will definitely come.
Policies are not gradual,
They are abrupt.
2️⃣ Circle is essentially a "sovereign debt channel"
Where does USDC money go?
👉 Short-term U.S. Treasuries.
This means:
For each additional 1 USD of USDC,
It is 1 USD helping finance the U.S. government
Short-term is a plus,
But long-term it could turn into:
An "untamed fiscal外挂."
And this is precisely the most sensitive point for regulators.
3️⃣ Growth ceiling depends not on the market, but on the central bank
Circle aims to build:
"Digital dollar infrastructure"
But real infrastructure
Must be approved by the central bank.
More realistically:
Large banks are developing their own stablecoins
Compliance scenarios will be continuously segmented
USDC may be "co-opted" as a restricted tool
Its potential will be compressed.
And the final irony, which is also the most truthful:
The earliest adopters of crypto
Believe in:
Decentralization
Censorship resistance
Breaking free from central bank control
Today, the most successful stablecoins:
Are the biggest buyers of U.S. government bonds,
Help the Treasury issue debt,
Support the Federal Reserve's system stability,
And have become the most loyal "outsourced" parts of the system.😂
History can sometimes be so ironic.
Stablecoins are not without a future,
But once they become too successful,
They are doomed to be "strictly regulated."
This is not a technical issue,
But a matter of financial power structures.
#稳定币