Without Asset Backing, “Stable Coins” Are Pyramid Scheme

According to foreign media reports, the Managing Director of the International Monetary Fund – Georgieva said on May 23 that stablecoins not backed by assets to support them are a pyramid scheme.

She said that If a stablecoin is backed with assets, one to one, it is stable. When it is not backed with assets, but it is promised to deliver 20% return, it’s a pyramid. They eventually will fall to pieces.

The IMF president’s statement hinted at TerraUSD. Terra’s lending agreement promised investors an annualized return of up to 20% when they deposited UST stable coins. And while TerraUSD promised to track us dollar, so one UST would be equivalent to one dollar. TerraUSD had no reserves to maintain its price stability, but rather to be backed with fiat currency and government bonds to maintain the peg to the U.S. dollar.

TerraUSD’s unexpected decoupling from the U.S. dollar earlier this month led to the collapse of UST and Luna, with the entire cryptocurrency market evaporating hundreds of billions of dollars in market capitalization and the price of its linked coin, Luna, crashed to zero.

These words of the IMF chairman fully confirm what Miles Guo expressed several times in his live broadcast – among global digital currencies, $1 Himalaya dollar converts to 1 us dollar. That’s a real stable coin, and HPay –the Himalaya payment system also adds the core value of the Himalaya Coin.