Critics see risk in ‘algorithmic’ stablecoins

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Washington (tca/dpa) — A new type of digital asset called an algorithmic stablecoin is gaining steam among crypto-enthusiasts — and drawing steam among critics, who warn its risks are in plain sight. Algorithmic stablecoins use market incentives, controlled by the algorithms that give the cryptocurrency its name, to maintain a stable price against a currency such as the dollar, rather than backing the price with assets like cash or Treasury securities, as other stablecoins do. An algorithmic stablecoin called TerraUSD is now the third-largest stablecoin by market value, according to sites that…

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