Federal Reserve Bank of Boston researcher finds stablecoin runs resemble money‑market fund runs, notes sharp outflows at $0.99

At a payments conference, Mattia Landoni, a researcher who works in financial stability at the Federal Reserve Bank of Boston, presented empirical evidence that large stablecoins can experience run‑type dynamics similar to money‑market funds and that investor behavior changes sharply near a $0.99 price level.

Landoni framed the question around runs and flights to safety: "There have been runs. There have been collapses," he said, and noted that many stablecoins are backed by traditional finance assets so large outflows force reserve sales that connect crypto markets to conventional money markets. He reported that the aggregate market capitalization of major stablecoins rose rapidly to about $200,000,000,000 and that money‑market funds in the U.S. hold roughly $5,000,000,000,000 in assets, illustrating the scale of potential spillovers.

The paper compared fiat‑backed stablecoins, offshore issuers and crypto‑collateralized tokens, and used price and supply data (primarily from CoinGecko) for the 12 largest stablecoins plus Bitcoin and blockchain‑specific flow data. Landoni examined two episodes qualitatively—the Terra/LUNA collapse and the 2023 Silicon Valley Bank stress that affected USDC—and then ran regressions across a two‑year panel. He reported that when crypto shocks originate within the crypto ecosystem (for example Terra), crypto‑style stablecoins lost assets while U.S. fiat‑backed coins gained. During the SVB episode, stress originating in traditional finance led some U.S.‑tied stablecoins to lose assets while offshore coins gained, consistent with flight‑to‑safety behavior.

A central empirical claim was a behavioral threshold around $0.99 per token. Landoni described a discontinuity: "When the price falls below 0.991 ... touch[ing] the psychological threshold of exactly 99¢ ... the stablecoin experiences in a daily outflow of 3.43% of assets," a substantially larger outflow than when prices remain above that mark. He cautioned that the mechanisms could be algorithmic selling, news, or other forces, but the statistical evidence suggested a robust threshold effect across coins and time periods.

Landoni also reported that flight‑to‑safety flows tend to occur within large blockchains (Ethereum, Tron, Binance): on days with outflows from offshore coins on a major blockchain, U.S.‑based coins on that same chain often see inflows. That pattern reversed on smaller chains, where outflows from offshore coins tended to accompany outflows from U.S. coins, implying platform trust influences whether funds stay on a blockchain or leave the platform entirely.

The discussant and audience raised methodological points about cross‑sectional leverage and influential observations—Landoni and the discussant agreed robustness checks and sensitivity analyses would clarify which observations drive results. The presenter left open empirical questions about exact causal channels and emphasized the work is a step toward treating the stablecoin–MMF analogy seriously.

Landoni concluded that "stablecoins are increasingly important" and that their run‑like behavior and links to traditional markets warrant further empirical and policy attention. The discussant urged more explicit robustness checks to separate aggregate crypto shocks (proxied by Bitcoin) from idiosyncratic issuer failures.

Next steps for the research include additional robustness tests and clearer identification of mechanisms driving the $0.99 threshold; the paper stimulated discussion about policy implications for reserve transparency and cross‑market spillovers.