Christoph Hock, head of digital assets and tokenization at Union Investment, one of Germany's largest institutional asset managers with nearly $620 billion in assets under management, has challenged the fundamental nature of major stablecoins. According to reports from the Digital Money Summit 2026 in London, Hock stated that 'to be honest, a stablecoin, from my perspective, is not a stablecoin' when discussing Tether and Circle's USDC. He highlighted that these tokens' reserve structures, which include massive holdings in gold and bitcoin, make them resemble speculative hedge funds rather than stable, low-risk instruments. The latest reports from CoinDesk reveal that even when backed by Treasury bills, Hock argues that 'even a mountain of Treasury bills cannot shield either token from a sudden liquidity crisis'. This criticism gains additional weight as recent developments show how stablecoins are being exploited for criminal activities.
Hock criticized the reserve allocation decisions of major stablecoin issuers, particularly Tether's substantial gold holdings. As reported by the summit, Tether's gold reserves as of January 2026 are estimated at 148 tonnes, valued at roughly $23 billion, ranking among the top 30 global owners of the metal and surpassing several sovereign nations. The asset manager argued that these allocations expose corporate treasuries to market volatility, shifting the risk from stablecoins to that of stealth hedge funds. For institutional players, Hock emphasized that a sudden 13% mark-to-market loss on cash positions is catastrophic for those relying on stablecoins as safe vehicles for overnight cash settlement. The latest analysis from CoinDesk notes that 'T-bills are the world's most liquid financial instrument — until they aren't', highlighting the vulnerability even of government-backed reserves during market stress.
The expert referenced significant historical de-pegging events that demonstrate the vulnerability of major stablecoins. According to summit reports, USDC dropped to $0.74 on three separate occasions in March 2024 following a marketwide sell-off, with the depeg occurring when traders sold USDC for USDT and insufficient liquidity maintained the $1 peg. Additionally, USDC's price plunged 13% to 87 cents while Ethereum gas fees soared hours after a crypto-tied bank failed, highlighting the catastrophic risk these events pose to institutional investors. The CoinDesk report emphasizes that 'a run doesn't have to be rational to be fatal; it just needs enough redemptions to force sales into a market that has stopped absorbing paper at par'. These vulnerabilities are now being exploited by criminal syndicates operating through stablecoin-based money laundering networks.
Recent investigations have revealed how stablecoin infrastructure is being systematically exploited for criminal activities. According to RUSI analysis, online scam losses reached an estimated $442 billion globally in 2025, with guarantee marketplaces operating through Telegram messenger apps serving as key enablers. The largest such platform was Huione Guarantee, which facilitated transactions totalling at least $31 billion before being designated as a primary money laundering concern by the US Treasury's Financial Crimes Enforcement Network in May 2025. Huione Pay, the payments business associated with the guarantee marketplace, processed at least $103 billion in USDT transactions. These platforms operate by holding guarantee deposits in Tether's USDT stablecoin, primarily on the TRON blockchain, allowing peer-to-peer transfers that circumvent traditional anti-money laundering checks imposed by banks. The infrastructure developed for these scams is becoming a foundational pillar of the modern global illicit economy, with an estimated 300,000 trafficked workers held in compounds forced to commit online fraud under threat of torture.
The structural composition of private stablecoins is facing heightened institutional scrutiny as regulators in European bloc countries clamp down on unauthorized digital assets. As reported by the Digital Money Summit 2026, European regulators are intensifying scrutiny of private stablecoins as institutional investors warn that leading tokens like Tether and USDC do not function as true fiat-pegged cash equivalents. Hock warned that 'taxpayers' money is again needed to bail them out' and slammed stablecoins for undermining their foundational promise as fiat-pegged digital assets, suggesting that institutional players cannot afford to take this level of risk. The latest developments come as Washington continues to wrestle with stablecoin legislation, with a landmark crypto bill facing fierce bank lobbying days before a Senate vote that would establish federal oversight for payment stablecoins. The criminal exploitation of stablecoin infrastructure adds urgency to these regulatory efforts, with RUSI calling for greater accountability from messaging platforms and stablecoin issuers and coordinated mandates requiring platforms like Telegram to shut down these marketplaces.
