07 Nov, 2025

The Stablecoin Depegging Crisis: Who’s Exposed, Who Survives?

A storm of trust and transparency is sweeping across the crypto world.

“When everything that could be borrowed with USDX was borrowed.”

This warning post on X (formerly Twitter) on November 6 marked the start of a long-brewing stablecoin crisis finally breaking to the surface.

On DeFi lending protocols such as Euler, nearly all assets that could be borrowed against USDX and sUSDX were drained. Borrowing rates in some pools spiked past 800% APY.

Meanwhile, on-chain addresses linked directly to Stables Labs founder Flex Yang began aggressively borrowing other stablecoins and transferring them to exchanges — an alarming move that triggered widespread market panic.

The USDX Depeg: A Real-Time Breakdown

The USDX depegging event served as a mirror, reflecting the fragility of decentralized stablecoins under extreme market stress.

USDX, issued by usdx.money, completed a $45 million funding round at a $275 million valuation late last year.

Like Ethena’s USDe, USDX adopts a delta-neutral hedging strategy, but unlike Ethena, it also uses altcoins as part of its trading strategy — amplifying returns, but also risk.

Before the meltdown, addresses directly linked to Stables Labs’ founder began showing unusual on-chain behavior: ignoring soaring borrow rates, these wallets drained all assets available for borrowing against USDX and sUSDX across multiple platforms.

Notably, one address beginning with 0x50de started accumulating large amounts of USDX and sUSDX in late October and proceeded to borrow USDT, USDC, and USD1 from Euler, Lista DAO, and Silo, transferring nearly all funds to Binance shortly after borrowing.

When it ran out of collateral to leverage, the address swapped USDX for USDT on PancakeSwap and again moved the proceeds to exchanges. This fire-sale exodus raised serious concerns about the true reserve backing of USDX.

The Cautionary Tale of USDe

USDX isn’t the first synthetic stablecoin to face depegging risk. On October 11, USDe — the world’s third-largest stablecoin — plummeted to $0.65, losing roughly 34% of its peg.

That day, the crypto market experienced an “epic crash.”

Bitcoin tumbled from $117,000 to $105,900, a single-day drop of 13.2%.

On Uniswap, liquidity in the USDe–USDT pool collapsed to $3.2 million, down 89% from pre-event levels. A sell order of 100,000 USDe experienced 25% slippage, filling at $0.62 instead of $0.70.

Unlike USDX, USDe quickly rebounded, recovering to $0.98 within hours.

The recovery was fueled by Ethena Labs’ third-party reserve attestation, confirming a collateralization ratio above 120%, backed by $66 million in excess collateral.

Most importantly, USDe’s redemption mechanism remained fully operational — users could redeem ETH and BTC collateral anytime, anchoring market confidence during the crisis.

The Security Spectrum of Stablecoins

Comparing USDX, USDe, and traditional fiat-backed stablecoins like USDT and USDC reveals a clear hierarchy of safety.

The takeaway: transparency and collateral quality directly determine stability.

USDX’s opaque structure and questionable backing made it vulnerable, while USDe’s transparency and robust reserves allowed for a swift recovery.

Structural Risks in DeFi

The USDX and USDe depegging episodes exposed deeper structural flaws within the DeFi ecosystem.

Delta-neutral stablecoins are not truly stablecoins in the traditional sense — they function more like structured financial derivatives of a protocol rather than independent monetary units.

Key issues include:

High-risk strategies & opaque execution

USDX’s complex delta-neutral model extended into altcoins, heightening exposure. Most of these strategies run off-chain on centralized exchanges, turning the project into a black box with no verifiable transparency.

Inter-protocol leverage and recursive collateralization

DeFi protocols are deeply interwoven. Some synthetic assets are built on top of themselves, creating recursive leverage loops. For example, crvUSD can use a stablecoin derivative of crvUSD as its own collateral to mint more crvUSD — making it nearly impossible to trace how much leverage exists even when all data is on-chain.

Why Large Stablecoins Remain More Resilient

Given USDX’s collapse and USDe’s brief depeg, investors are asking:
Why do giants like USDT and USDC remain stable?

Scale and institutional adoption

According to CertiK’s 2025 Skynet Digital Asset Treasury Report, publicly listed companies now hold over $130 billion in digital assets.

Institutional investors prefer audited, custody-backed stablecoins with regulatory compliance and transparent disclosures — a moat that protects USDT and USDC.

Regulatory alignment and disclosure

Circle, issuer of USDC, proactively engages with regulators and regularly publishes reserve breakdowns.

In contrast, USDX and similar projects lack third-party audits or reserve proofs, eroding market trust.

Collateral quality and redemption mechanisms

USDT and USDC are backed by fiat, cash equivalents, and short-term U.S. Treasuries — highly liquid, low-volatility assets.

Synthetic stablecoins like USDX rely on crypto-collateral and off-chain hedging, which can collapse under market stress.

When volatility spikes, capital naturally migrates toward safety — from high-risk synthetic coins to fiat-backed stalwarts like USDT and USDC.

Even after Bybit’s recent hack, over $4 billion in institutional inflows entered the market, reaffirming long-term confidence in quality crypto assets.

In the end, while DeFi innovation continues to push boundaries, one truth remains unchanged: In finance — whether on-chain or off — security and transparency are the ultimate foundations of trust.

10 Nov, 2025

Bank of England Opens Consultation on ‘Systemic’ GBP Stablecoin Rules With Temporary Holding Limits

The Bank of England has launched a consultation on its proposed regulatory regime for sterling-denominated "systemic" stablecoins and a potential digital pound.Published on Monday, the consultation paper outlines how such stablecoins could operate alongside existing payment systems for both retail and wholesale use. The move builds on reports of the proposal last week and feedback to a 2023 discussion paper, reflecting the bank's aim to modernize payments while maintaining public trust in money, according to a statement.Under the proposals, the regime would apply only to sterling-denominated stablecoins designated as systemic by HM Treasury and used at scale in UK payments — with the Bank of England overseeing prudential and financial stability risks and the Financial Conduct Authority supervising conduct and consumer protection.It does not apply to non-sterling or existing stablecoins used mainly for buying and selling crypto assets, such as USDT and USDC, which will continue to be supervised by the FCA.The bank said the framework is intended to be "robust and future-proof," aligning with broader strategies to modernize UK retail payments.Backing rules and temporary holding limitsA key feature of the consultation is the approach to backing assets. Systemic stablecoin issuers would be allowed to hold up to 60% of reserves in short-term UK government debt, with the remaining 40% placed in unremunerated accounts at the Bank of England to support redemption and public confidence, the bank said.Issuers deemed systemic at launch or transitioning from the FCA regime could initially hold up to 95% of backing assets in short-term government debt to support early-stage viability. The central bank is also considering central bank liquidity arrangements to provide a backstop during periods of market stress.To manage risks from rapid outflows of bank deposits into digital money, the Bank of England has also proposed temporary holding limits of £20,000 ($26,350) per stablecoin for individuals and £10 million ($13.2 million) for businesses, with exemptions for the largest firms to hold more if required. These limits would be lifted once the transition no longer poses risks to credit provision, the bank said, and would not apply to stablecoins used for wholesale settlement within the Digital Securities Sandbox operated by the Bank of England and the FCA."Today's proposals mark a pivotal step towards implementing the UK's stablecoin regime next year. Our objective remains to support innovation and build trust in this emerging form of money," Bank of England Deputy Governor for Financial Stability Sarah Breeden said. "We've listened carefully to feedback and amended our proposals for achieving this, including on how stablecoin issuers interact with the Bank of England. These proposals are fit for a future where stablecoins play a meaningful role in payments, giving the industry the clarity it needs to plan with confidence." The consultation runs until Feb. 10, 2026, with the Bank of England and the FCA set to publish a joint approach paper later next year to clarify how the rules will work in practice and guide a smooth transition.

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05 Nov, 2025

Ripple Partners with Mastercard, WebBank, Gemini to Enable Stablecoin Settlement with RLUSD

Ripple has announced a collaboration with Mastercard (NYSE:MA) , WebBank, and Gemini (NASDAQ:GEMI). Together they’ll explore the use of Ripple USD (RLUSD) on the XRPL, a public blockchain built for efficient payments, in order support stablecoin settlement of fiat card transactions.The initiative is supposed to enable RLUSD, operating on the XRPL, to facilitate blockchain-powered settlement processes between Mastercard and WebBank, which is currently the issuer of the Gemini Credit Card.Sherri Haymond, Global Head of Digital Commercialization at Mastercard said that they are guided by their commitment to consumer choice and a principled approach to stablecoins—one that “emphasizes strong consumer protections, a level playing field, and regulatory compliance—they’re enabling settlement today while exploring how stablecoins can support future use cases.”After it has been implemented, this will mark one of the “first” collaborations where a regulated U.S. bank “settles traditional card transactions using a regulated stablecoin on a public blockchain.”This effort expands on Ripple’s work with Gemini and WebBank on the Gemini Credit Card, which launched “an XRP edition and serves as a model for how digital assets can be integrated into traditional payment programs.”Dan Chen, Chief Financial Officer at Gemini said that in this next phase of the collaboration, they’re demonstrating “how stablecoin settlement can be applied to an active card program, connecting blockchain innovation to real consumer payments.”With low costs, fast processing, and reliable performance, the XRPL offers a foundation for digital payments.XRP, the digital currency that powers the XRPL, continues to play a key role, helping “keep the network secure and enabling efficient transactions as newer assets like RLUSD expand its use.”RLUSD is a U.S. dollar–backed stablecoin issued “under the New York Department of Financial Services (NYDFS) Trust Company Charter and backed by cash and cash-equivalent reserves.”Since launching in 2024, RLUSD has grown “to over $1 billion in circulation, supported by adoption across DeFi platforms, Ripple’s cross-border payment solution, and institutional partners.”In the coming ahead, the partners will reportedly carry out initial RLUSD onboarding on the XRPL, which is said to be subject to obtaining the required regulatory approvals, and start integration planning “within existing Mastercard and WebBank settlement processes.”

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