What Is the Systemic Risk Associated with a Major Stablecoin Losing Its Peg?

A major stablecoin de-pegging poses a significant systemic risk because stablecoins are widely used for trading pairs, collateral, and lending across the entire crypto ecosystem. Its failure would lead to a cascade of liquidations, loss of confidence, and a massive flight of capital out of the market.

This could trigger a severe, widespread market crash and potentially draw increased regulatory scrutiny on the entire industry.