Crypto’s “Safest Asset” Just Lost 99% of Its Value

Banks and card networks are building their own stablecoin rails, and X has reportedly considered paying creators in existing stablecoins. SimpleSwap‘s Head of Analytics talks to BlockchainReporter about why the rush is real and why “stable” doesn’t mean what most people assume. He also lays out what to actually check before trusting someone with real money.

Stablecoins spent most of the last decade as crypto’s supporting cast, useful but mostly ignored. Nobody wrote headlines about them. That changed somewhere around this summer. Visa built a platform to issue and manage them. Mastercard bought stablecoin infrastructure company BVNK for up to $1.8 billion. Nine European banks formed a joint venture, Qivalis, to issue a euro-denominated stablecoin under MiCA. And reporting suggests X has looked at paying creators in stablecoins, using existing tokens rather than minting its own.

BlockchainReporter sat down with Rick Cramer, Head of Analytics at self-custodial swap aggregator SimpleSwap, to make sense of the rush: why it’s happening now, and why banks are turning out to be the more interesting part of the story than crypto-native issuers. He also makes the case for why the industry’s favorite pitch, that a stablecoin is the safe corner of crypto, needs a serious asterisk.

BlockchainReporter: Let’s start broad. Stablecoins have been around for close to a decade. Why does 2026 feel like the year everyone suddenly cares?

Rick Cramer: Because the buyer changed. For most of that decade, a stablecoin was something a trader used to sit out volatility between two bets. That’s still true, but it’s the smaller story now. The bigger issue is that stablecoins have become settlement rails for parties that have nothing to do with trading.

Coinbase says Base alone has processed something like $19 trillion in stablecoin volume so far this year, and in June it briefly edged out Ethereum for the busiest single month across any chain. A meaningful slice of that traffic isn’t a person clicking send. There’s a payment protocol called x402 that lets AI agents pay each other in USDC for API calls and data, with no invoices and no human approval required. In a single 30-day stretch this August, agents made close to 17.8 million of those payments, and Token Terminal’s numbers show that essentially all of them settled in USDC.

That is the honest answer to “why now.” Stablecoins used to be a trade. Now they are becoming plumbing for people moving money across borders and for software paying other software in real time. Once something becomes plumbing, every company building financial infrastructure wants a piece of the pipe. That is the logic behind Visa’s platform and the bank ventures. X is the same story from the other side: if the reporting holds up, it looks like it will pay creators in stablecoins that already exist instead of issuing its own. That is what plumbing looks like once it is good enough to plug into rather than rebuild.

BlockchainReporter: That’s the demand side. On the supply side, it feels like every major company wants its own token. Revolut introduced a euro stablecoin to its users in October. Visa launched a full platform in July. Mastercard bought BVNK for up to $1.8 billion. Why build instead of borrowing someone else’s rail?

Rick Cramer: Start by separating two jobs that are discussed as one. Issuing a stablecoin and distributing it are different businesses, with different economics and different regulators.

Revolut is a good illustration because it went the distribution route rather than the issuance route. The euro token that its users see is issued by Bridge, the stablecoin infrastructure company Stripe acquired. Revolut puts it in front of a very large user base and owns that relationship. Bridge does the regulated issuance work and sits with the reserves. Both sides get something they want, and neither one has to become the other.

Distribution is the reason a company would rather not be a wallet sitting on top of somebody else’s rail. If your users move euros on-chain through a token you surface, you stay the layer they touch. Visa’s platform makes that logic explicit: it lets banks and fintechs issue and manage stablecoins inside Visa’s environment, so Visa remains the layer everyone touches whether money moves through a card or a token.

Issuance is where the float lives. An issuer holds reserves, usually short-term government debt, and earns a yield on money that would otherwise sit in an account that pays no interest. Every large payments company watched Circle build a real business on that mechanic and ran the numbers. Mastercard didn’t spend up to $1.8 billion on BVNK for the logo. BVNK had a working bridge between fiat and stablecoins, and Mastercard has a network accepted at more than 150 million locations to point it at.

None of this is a hidden agenda. It’s the same instinct behind every payment rail that’s ever existed: whoever owns the rail collects a toll from everyone who uses it. A stablecoin just happens to be the first version of that rail a bank can build in months instead of decades.

BlockchainReporter: That’s a fairly clean growth story: bigger players, tighter regulation, more legitimacy. So, is it fair to say stablecoins have earned their reputation as the safest asset in crypto?

Rick Cramer: No, and I’d push back hard on that framing. “Stablecoin” describes a price behavior, not a safety guarantee. It tells you the asset is designed to sit near a dollar. It doesn’t tell you what’s standing behind that design.

Split the category into two. Reserve-backed tokens, like USDC and RLUSD, maintain their peg because they are backed by real dollars or treasury bills, redeemable one-for-one, under some regulator’s supervision. The risk there looks like counterparty risk: whether the reserve is actually there and whether the issuer stays solvent.

Algorithmic and undercollateralized designs are a different animal. Their peg is held together by contract logic and a price feed instead of a dollar in a vault. Those don’t fail slowly. They fail in an afternoon.

Look at Balance Coin in July. It was an algorithmic stablecoin on BNB Chain, backed by BTC collateral and run by a DAO called 42DAO. An attacker fed a manipulated Bitcoin price into the protocol’s oracle. The protocol had no safety module to catch the anomaly and delay it, so the system treated the fake price as real and wrongly liquidated a batch of collateral vaults. That let the attacker mint millions of tokens out of thin air and sell them into the open market. Balance Coin went from close to a dollar to under half a cent within hours, on roughly $915,000 of actual exploited value. A token built to represent a dollar lost effectively all of its worth because of one bad input in one oracle.

BlockchainReporter: People will read that and immediately think of Terra. Is it the same story at a smaller scale?

Rick Cramer: It isn’t, and the difference is worth getting right, because the two failures teach different things.

Terra wasn’t exploited. Its peg rested on an arbitrage loop between UST and LUNA: burn one to mint the other, and let traders keep the spread. When redemptions outran the market’s appetite for newly minted LUNA, the loop ran in reverse and kept running. Nobody had to attack it. The design unwound under its own logic, in public, over days.

Balance Coin was an attack. The design might have held for years if the input had been honest. Someone corrupted a single price feed and let the protocol’s own liquidation machinery do the rest, in hours.

What the two cases share is narrower than “algorithmic stablecoins fail,” and more useful. In both, the dollar was maintained by an ongoing process rather than held as something you could redeem. A reserve can be published, audited, and claimed. A process has to keep working every block, against everyone with a reason to break it. That’s the property worth checking, and it doesn’t map neatly onto the label on the token.

BlockchainReporter: So how is an average user, or honestly a company treasurer, supposed to tell the difference before something like that happens to them?

Rick Cramer: Ask what’s behind the token before you ask about the yield or the branding.

Two questions do most of the work. What’s the collateral, and is it something you could point to if you had to? A published reserve report backed by real treasuries is a very different animal from a protocol that mints new supply whenever a price feed indicates demand. And can you redeem the token for what it claims to represent on demand, rather than only in theory?

That second question is why we started building Know the Scam, our running project cataloging the patterns that recur: tokens that quietly stop behaving like the dollar they claim to track, and cloned websites that appear the moment any exchange gets popular enough to be worth impersonating. We’ve been cloned this way ourselves. Fake SimpleSwap look-alike domains get flagged by security researchers fairly regularly, which is why the only address we ever point people to is simpleswap.io.

I wouldn’t blur fraud and bad engineering, because they’re different problems with different fixes. What they have in common is the position they put you in. You’re being asked to act on a claim you haven’t checked, at a speed that makes checking feel like the unreasonable option. Checking costs a few minutes. Not checking costs whatever you sent.

BlockchainReporter: Let’s bring it back to SimpleSwap specifically. How much of what moves through the platform is actually stablecoins at this point?

Rick Cramer: A noticeably bigger share than a year ago. We just closed out our H1 Swap Report, and the interesting line for us internally wasn’t any single asset spiking. It was stablecoins taking up a visibly larger slice of total swap volume than they did last year, across most of the corridors we track. That tracks with everything we’ve been talking about. It’s less a crypto trade now and more a transfer mechanism, which is the bet Visa and the Qivalis banks are both making from opposite ends of the same industry.

BlockchainReporter: Does the self-custodial, wallet-to-wallet model change the risk calculus at all, compared with holding a stablecoin on a regular exchange?

Rick Cramer: It relocates the risk rather than removing it, which is an important distinction. SimpleSwap doesn’t hold a long-term balance for anyone. A swap moves wallet-to-wallet: your funds leave a wallet you control and land in another wallet you control, with no position of ours sitting in between overnight. If a token depegs the way Balance Coin did, the exposure that matters is whatever you already chose to hold before or after the swap, not something parked on our side of the transaction, because there is no side of the transaction where funds just sit.

That doesn’t erase the homework. It passes it back to the person making the swap. If you’re moving into a stablecoin you haven’t used before, two habits take under a minute each and prevent most of the damage we see. Confirm you’ve picked the right network, since something like USDT lives on half a dozen chains and sending to the wrong one is unrecoverable. And if the amount matters, run a small test swap before committing the full one. Neither habit is exciting, but the boring ones are usually what keep a transaction from turning into a headline.

BlockchainReporter: Last question. If someone takes away one thing from this conversation, what should it be?

Rick Cramer: That “stable” was never really a description of the coin. It’s a claim about whoever is standing behind it, whether that’s a licensed bank or a piece of code that’s never been tested against a bad enough day. Check who that is before you check the price. A peg holds right up until it doesn’t, and by then the question of what was actually backing it stops being academic.

Rick Cramer is Head of Analytics at SimpleSwap, a self-custodial multi-source swap aggregator that routes wallet-to-wallet crypto swaps across CEX and DEX liquidity without holding a long-term balance for users. SimpleSwap has served more than 10 million users since 2018 and supports over 2,800 assets, including the major stablecoins discussed above. Its H1 Swap Report and its Know the Scam project are both available at simpleswap.io.