A new paper argues that, despite being anchored to fiat money reserves, stablecoins do not meet the definition of money.

The paper, Taming Wildcat Stablecoins, published July 19, argues that stablecoins cannot be money because parties in a transaction cannot be mutually sure of the asset’s value during a transaction. The authors – Gary Gorton of Yale and Jeffrey Zhang of the Federal Reserve – contend stablecoins violate the “no-questions-asked” principle required of a medium of exchange.

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