Verdict: Useful Settlement Tool, Not Risk-Free Cash
For corporate treasuries, asset managers and trading desks, the central question is not whether Tether’s USDT or Circle’s USDC are widely used. They are. The better question is whether either token should be treated like cash when liquidity matters most.
Christoph Hock, head of tokenization and digital assets at Union Investment, argued at the Digital Money Summit 2026 in London that leading private stablecoins do not behave like simple fiat cash equivalents in every stress scenario. His warning was aimed at institutions using stablecoins for overnight settlement, collateral movement or short-term treasury parking, where even a temporary break from the dollar peg can create operational and mark-to-market problems.
The practical buyer takeaway is clear: reserve size matters, but it is not the whole diligence process. Investors also need to examine reserve composition, redemption mechanics, exchange liquidity, banking exposure and the legal route back to actual dollars.
What Hock Is Criticizing
Hock’s sharpest criticism was that some private stablecoin structures look less like narrow digital cash products and more like investment vehicles with embedded market risk. He specifically pointed to Tether’s exposure to assets such as gold and bitcoin, arguing that those holdings complicate the promise of a stable dollar instrument.
That distinction matters for buyers. A token can be heavily backed and still expose users to timing, liquidity and confidence risk during a market shock. In a calm market, a stablecoin may trade close to $1 for months. In a stressed market, the relevant question becomes how quickly holders can redeem, whether secondary-market liquidity holds, and whether the issuer’s reserves can be converted without creating losses or delays.
USDC carries a different risk profile. Circle’s product is generally presented as a regulated, reserve-backed dollar stablecoin, but it has still experienced depegging episodes. In March 2023, USDC fell to about $0.87 after Circle disclosed that part of its reserves were held at Silicon Valley Bank, which had failed. In January 2024, USDC also briefly traded as low as $0.74 against USDT on Binance during a short-lived liquidity disruption, before quickly returning to its peg.
Hock described such episodes as potentially severe for institutions that treat stablecoins as safe overnight cash. That assessment should be read as his risk view, not as proof that every stablecoin holder would realize the same loss in every scenario. The damage depends on position size, accounting treatment, redemption access and whether the holder is forced to sell during the dislocation.
Buyer Decision Matrix: USDT vs. USDC Risk Questions
| Decision point | Why it matters | What buyers should check |
|---|---|---|
| Reserve composition | Headline backing can hide different asset risks. | Cash, T-bills, secured loans, bitcoin, gold and other reserve disclosures. |
| Redemption access | A $1 token is most useful when it can actually be redeemed at $1. | Eligibility, minimum sizes, fees, timing and jurisdictional limits. |
| Secondary-market liquidity | Many institutions exit through exchanges rather than direct redemption. | Depth across trading pairs, venues and stress periods. |
| Banking exposure | Bank failures or access problems can affect confidence quickly. | Custodian banks, concentration risk and issuer contingency plans. |
| Accounting impact | A temporary depeg can still create reporting or risk-limit issues. | Mark-to-market rules, internal limits and forced-sale triggers. |
For a trading firm, USDT’s liquidity across crypto venues may be the decisive feature. For a corporate treasury, USDC’s regulatory posture and redemption framework may carry more weight. Neither choice removes the need for internal controls.
Where T-Bills Help, and Where They Do Not
Short-term U.S. Treasury bills can reduce credit and duration risk when compared with riskier reserve assets. But Hock’s point was that a large pile of T-bills does not automatically solve a sudden confidence or liquidity crisis.
If many holders rush for exits at once, the system still depends on redemption processes, market-making capacity and the issuer’s ability to meet withdrawals cleanly. If holders cannot redeem directly, they may be exposed to exchange order books instead. In that case, the token’s price can move below $1 even if the issuer’s balance sheet later proves sufficient.
Tether’s reported gold position has also drawn attention. Estimates published in early 2026 put its gold holdings at roughly 148 tonnes, valued around $23 billion at then-prevailing prices. Supporters may view that as balance-sheet strength. Critics see a different issue: gold and bitcoin can rise in value, but they are not the same as cash held for immediate redemption.
Who Should Be Careful
This risk review is most relevant for institutions that use stablecoins as operational cash rather than as speculative crypto exposure. That includes:
- Corporate treasuries settling invoices or moving funds between venues.
- Asset managers using stablecoins for tokenized fund workflows.
- Market makers relying on stablecoin balances as short-term inventory.
- Crypto funds that report daily net asset value or run tight risk limits.
For these users, the issue is not only whether a token eventually returns to $1. The issue is whether a temporary break creates forced selling, client reporting problems, breached mandates or emergency liquidity needs.
Bottom Line for Institutional Buyers
Stablecoins can still be useful settlement rails. They are fast, widely integrated and deeply embedded in crypto market structure. But the case for using them as treasury cash should be made with stress assumptions, not convenience alone.
A practical policy should define which stablecoins are approved, how much exposure is allowed, which venues may be used, who can redeem directly, and what happens if the token trades below a set threshold. Buyers should also separate trading liquidity from reserve quality. Both matter, and either can fail at the wrong time.
Hock’s warning is best understood as a challenge to lazy classification. USDT and USDC may function like dollars most of the time, but institutions buying them for settlement or treasury operations need to treat them as digital instruments with their own liquidity, issuer and market-structure risks.