As cryptocurrencies get hammered in the economic meltdown, stablecoins -- whose value is pegged to another asset like a fiat currency or a commodity -- are also bad investments and are ill-suited as a form of money, Siddharth Tiwari, the Asia-Pacific head of the Bank of International Settlements (BIS), has said.
In a South China Morning Post report, Tiwari said that stablecoin name does not suggest that these are "stable" investments."Recent events show that stablecoin fails to achieve the full network effect we would normally expect of money. But the innovation that they bring is important for us, and could be useful for the design of central bank digital currencies," he was quoted as saying in the report.
Stablecoins differ from cryptocurrencies such as Bitcoin and ethereum.
Last month, the shocking implosion of the TerraUSD and Luna cryptocurrencies threw many young investors into a panic, some of them saying their entire assets were blown up or even leaving suicidal messages. In a crash, the once bullish TerraUSD and sister coin Luna had lost almost all their value, sending shock waves across the world.
Similar accounts of massive investment losses were shared on online communities the world over, with some investors even leaving messages hinting at plans of suicide.
TerraUSD and its digital coin counterpart, Luna traded in the 10 cent-range and nearly at zero, respectively, registering more than 99.99 percent falls from their highs and wiping out nearly $38 billion of investors' money, according to data by CoinMarketCap.