Viewpoint: Tether's and USDC's Reserve Structures More Resemble a Hedge Fund With High Risk

May 20 – Christoph Hock, Head of Digital Assets and Tokenization at major German asset manager Union Investment, told attendees at the 2026 London Digital Money Summit that USDT and USDC don’t qualify as genuine "stablecoins" under strict definitions. He noted their reserve structure bears more resemblance to a high-risk hedge fund. Hock emphasized that Tether’s reserves hold large amounts of gold and Bitcoin, meaning the token isn’t a purely USD-backed low-risk cash equivalent. According to him, this framework transfers market volatility risk to corporate finance teams and institutional investors. He specifically referenced USDC’s past 13% de-pegging event, arguing that such price swings pose "catastrophic risks" for corporate finance departments and asset management firms that rely on stablecoins for overnight cash settlements. Institutional investors can’t stomach significant, short-term losses in their cash positions, Hock said, adding that some stablecoins have strayed from their original goal of functioning as fiat-anchored digital cash. Data as of January 2026 puts Tether’s gold reserves at roughly 148 tons, valued at about $23 billion—an amount exceeding the gold holdings of some sovereign nations. As European regulators continue stepping up oversight of unapproved stablecoins, stablecoin reserve transparency and liquidity risks are emerging as core concerns for traditional financial institutions.