Nobel Prize winner Paul Krugman criticizes "stablecoins are toxic": a new type of shadow banking, the only killer function is to harm the economy.

Paul Krugman, winner of the Nobel Prize in Economics in 2008, criticized stablecoins on his blog, pointing out that they are no different from shadow banking, and saying that the only killer function would harm socio-economic collapse, potential crime and systemic risks, causing deep discussion in the crypto circle. (Synopsis: Buffett's comrades-in-arms" Charlie Monger: It's an idiot to buy cryptocurrency!) U.S. deregulation should be ashamed) (Background added: Will micro-strategies go bankrupt? Bitcoin villain Peter Schiff warns: If U.S. stocks go bear, BTC may fall below $20,000) Nobel Prize in Economics 2008 winner Paul Krugman posted on his Substack blog around May 30, 2025, pointing out that stablecoins "do not have any obvious useful function" and are mainly used to "facilitate criminal activity". The remarks sparked a backlash from Coin Metrics co-founder Nic Carter on the X platform, highlighting the confrontation between traditional economics and the cryptocurrency space. Krugman: Stablecoins lack utility, potential crime and systemic risk Krugman believes that stablecoins have no cost or convenience advantages in everyday shopping compared to traditional payment tools. He questioned why stablecoins should not be used directly if they are backed by the US dollar. Krugman emphasized that the anonymity of stablecoins makes them a tool for illegal activities such as money laundering, extortion, etc., and likened stablecoin issuers to the "wildcat bank" (wildcat banks) that scammed users in the 19th century. He further dismissed stablecoins as a "new type of shadow banking" that could trigger systemic risks. Krugman worries that if stablecoin issuers are forced to "sell" their large holdings of U.S. Treasuries due to a run, interest rates may soar and even trigger a "run on government debt", threatening overall financial stability. He also questioned MPs' motives for supporting the stablecoin bill. Carter: Used by more than 100 million people around the world to refute Krugman's views In response to Krugman's sharp criticism, Nic Carter called his views "remarkably misformed" (grossly false). Carter pointed out that "more than 100 million people" around the world use stablecoins, and the flow of underground stablecoins such as USDT and USDC is very prevalent, which is enough to refute the argument that stablecoins lack utility, and these users will "strongly disagree" with Krugman's statement. Paul "Teddy" Fusaro, president of Bitwise Asset Management, also said it was "very forgiving" to call Krugman "seriously wrong." Carter emphasized that stablecoins have significant value in facilitating cross-border transactions, enhancing global financial interoperability, and providing liquidity to the cryptocurrency market, and their effectiveness in supporting large transactions and market depth cannot be ignored. In summary, the heated debate between Paul Krugman and Nic Carter about stablecoins reflects a wide divergence in the value and risk perceptions of this emerging asset. This controversy, which will take place in 2025, indicates that the regulatory and development path of stablecoins will remain challenging, and how to balance innovation and risk will continue to be the focus of attention in the future. Related reports Rich dad shouts collapse 5 years finally coming true? Warning again: a disaster worse than the Great Depression in the United States is coming Rich dad warns: the biggest stock market crash in history has started, baby boomers may be destroyed, don't buy Bitcoin spot ETF Rich Dad: The United States is more than $230 trillion in debt and preparing for bankruptcy, I am using "counterfeit banknotes" to buy special bitcoin [Nobel Prize Paul Krugman scolded "stablecoins are toxic": the new type of shadow banking, the only killer function is to kill the economy] This article was first published in BlockTempo The most influential blockchain news media.