Nobel Economics Prize winner Paul Krugman, around May 30, 2025, posted on his Substack blog, directly stating that stablecoins "lack any obvious useful function" and are primarily used for "facilitating criminal activity". This statement triggered a strong rebuttal from Coin Metrics co-founder Nic Carter on the X platform, highlighting the clash of perspectives between traditional economics and the cryptocurrency domain.
Krugman: Stablecoins Lack Utility and Pose Criminal and Systemic Risks
Krugman believes that compared to traditional payment tools, stablecoins offer no cost or convenience advantages in daily shopping. He questions why, if stablecoins are backed by US dollars, one would not simply use US dollars. Krugman emphasizes that the anonymity of stablecoins makes them tools for illegal activities like money laundering and extortion, comparing stablecoin issuers to 19th-century "wildcat banks" that defrauded users.
He further views stablecoins as a "new type of shadow banking" that could trigger systemic risks. Krugman is concerned that if stablecoin issuers are forced to "sell at a discount" their large holdings of US government bonds during a bank run, this could cause interest rates to soar and potentially trigger a "government debt run", threatening overall financial stability. He also questions the motives of congressional representatives supporting stablecoin legislation.
Carter: Used by Over 100 Million People, Refuting Krugman's View
In response to Krugman's sharp criticism, Nic Carter called his perspective "remarkably misinformed". Carter pointed out that over "100 million people" globally use stablecoins, and underground stablecoins like USDT and USDC are highly liquid, which sufficiently refutes the argument of stablecoins lacking utility. These users would "strongly disagree" with Krugman's statements. Bitwise Asset Management President Paul "Teddy" Fusaro also believed that calling Krugman "severely mistaken" was already very generous.
Carter emphasized that stablecoins have significant value in facilitating cross-border transactions, enhancing global financial interconnectivity, and providing liquidity to the cryptocurrency market, with their effectiveness in supporting large transactions and market depth being undeniable.
In summary, the heated debate between Paul Krugman and Nic Carter about stablecoins reflects the massive differences in perceiving the value and risks of this emerging asset. This 2025 argument suggests that the regulation and development path of stablecoins will continue to be challenging, with balancing innovation and risks remaining a focal point for various sectors.
