Stablecoins behave like hedge funds, expert warns at summit

At the Digital Money Summit 2026 in London on Tuesday, digital asset experts raised fresh concerns about the structural composition of private stablecoins. They suggested these tokens are facing heightened scrutiny from regulators in European bloc countries who are clamping down on unauthorized digital assets.

Christoph Hock, head of Tokenization and Digital Assets at Union Investment, brought sharp criticism. Union Investment is one of Germany’s largest institutional asset managers, with nearly $620 billion in assets under management. Hock argued that the reserve backing used by Tether and Circle for their dollar-pegged stablecoins behaves structurally more like a speculative fund than a true fiat peg.

“To be honest, a stablecoin, from my perspective, is not a stablecoin,” Hock said. He pointed out that Tether holds massive amounts of gold and bitcoin. Circle’s USDC also holds complex assets. Because of this, Hock said both USDT and USDC look more like hedge funds. He warned that their tokenomics are vulnerable and could directly affect holders’ financial interests.

Risk of taxpayer bailouts

Hock recalled Circle’s 13% de-pegging event from March 2023, when USDC dropped to $0.74. At the time, a trader sold USDC for USDT, and there was not enough liquidity to maintain the $1 peg. Ethereum gas fees also soared. Hock noted that a similar event could again require taxpayer money to bail out the system. He called the risk “catastrophic” for institutional investors.

In March 2024, USDC dropped to $0.74 again on three separate occasions after a marketwide sell-off. The depeg then was again linked to a lack of liquidity. These events highlight how fragile the peg can be during stress.

Tether’s gold and bitcoin holdings

Hock also criticized Tether’s decision to allocate substantial funds to gold and bitcoin. As of January 2026, Tether’s gold reserves were estimated at 148 tonnes, valued at roughly $23 billion. That puts Tether among the top 30 global gold owners, surpassing several sovereign nations. But Hock argued that these asset choices expose corporate treasuries to market volatility. Instead of a stablecoin, he said, investors get exposure to a stealth hedge fund.

For corporate treasury managers and asset managers who rely on stablecoins strictly for overnight cash settlement, a sudden 13% mark-to-market loss on cash positions is catastrophic, Hock insisted. He said institutional players absolutely cannot afford to take this level of risk. He slammed stablecoins for undermining their foundational promise as fiat-pegged digital assets.

The overall message from the summit was clear. The stablecoin industry, despite its growth and popularity, still carries structural risks that regulators and users may not fully appreciate.

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