Digital money.
Banking. Financial stability.

We compare stablecoin risk under trust charters, limited payment access, banking-as-a-service arrangements, and full-service banking. When liquidity requirements do not bind, stronger perceived protection induces issuers to replace cash with interest-bearing reserves, increasing liquidation in an unsupported failure. Using 211 monthly reserve reports for five dollar stablecoins, combined with daily circulation and FINRA Treasury trading data, we find that a 30 percent contraction in liabilities would exceed bank cash in 63.2 percent of complete reserve portfolios.