Stablecoins under Stress in a National Economy: Transaction-Level Evidence from Austrian Crypto-Asset Service Providers
This paper leverages a unique Austrian regulatory registry to analyze transaction-level data from crypto-asset service providers, revealing that while these entities facilitate roughly $30 billion in globally integrated flows dominated by institutional counterparties, their distinct responses to major financial shocks—such as the SVB failure—demonstrate that stablecoins do not function as a uniform safe haven and that such nuanced risk transmission patterns remain invisible in aggregate data.
Original paper licensed under CC BY 4.0 (http://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
Imagine the crypto world as a giant, bustling bazaar where millions of people trade digital coins. Usually, we try to guess who is buying and selling by looking at footprints in the dust or guessing how many people are walking by the gate. But this paper found a secret map. The authors got a special list from the Austrian government that tells them exactly which digital "mailboxes" (addresses) belong to the official crypto shops (called CASPs) in Austria. With this map, they didn't have to guess; they could watch the actual money move, transaction by transaction, from 2016 up to May 2025.
Here is what they discovered when they zoomed in on the chaos.
The Global Bazaar, Not a Local Town
First, they looked at the size of the party. Austrian crypto shops moved a massive amount of money—roughly $30 billion in trades with people outside of Austria. But here's the twist: the shops barely talked to each other. The money moving between Austrian shops was only $5.8 million. It's like a town where every shop is connected to the whole world, but the neighbors never visit each other. Also, a huge chunk of the activity—about $20.7 billion (or 41.1% of the total volume)—was just the shops moving money from their own "hot" pockets to their own "cold" safes. It looked like trading, but it was just internal bookkeeping.
The Two Types of Shoppers
The authors figured out how to tell the difference between a regular shopper (retail) and a giant whale (institution) without knowing their names. They used two clues:
- Where they go: Regular shoppers only visit the front door (hot wallets). The giants go straight to the vaults (warm and cold wallets).
- How often they move: Regular shoppers pop in a few times. Giants are constantly moving.
The result? The crowd was mostly regular shoppers. About 98% of the addresses were "retail-like," making small trades of a few hundred dollars. But the giants were the ones moving the heavy lifting. Even though they were only 0.77% of the addresses, they handled 57.8% of the total money. It's a classic case of the few moving the many.
When the Ground Shakes: Three Big Shocks
The authors watched how these two groups reacted when the crypto world got scared by three major disasters: the Terra-Luna crash, the FTX bankruptcy, and the Silicon Valley Bank (SVB) failure. They found that regular shoppers and giants didn't panic in the same way.
- The Terra-Luna Crash (May 2022): This was a panic about a specific type of digital coin losing its value. The giants started moving money back and forth wildly, like they were rearranging their furniture to see what was safe. Regular shoppers moved a bit too, but it wasn't a uniform rush to safety.
- The FTX Collapse (November 2022): This was a scare about a specific shop going bankrupt. Regular shoppers reacted by running for the exits, withdrawing their money to keep it in their own pockets (self-custody). The giants, however, started depositing huge amounts of money. It looks like they were just shuffling their reserves around to manage liquidity, not fleeing.
- The Silicon Valley Bank Failure (March 2023): This is the most interesting one. SVB was a bank that held money for the company that issues USDC, a popular stablecoin. When SVB failed, the reaction was split right down the middle. Regular shoppers started depositing USDC into the Austrian shops, likely trying to sell it quickly before the price dropped. But the giants started withdrawing USDC in massive amounts.
The "Safe Haven" Myth
There is a popular idea that when things get scary, everyone rushes into stablecoins (like USDC or USDT) because they are "safe." The authors found that this is not true. The data suggests stablecoins do not act as a uniform safe haven.
In the SVB case, the "safe haven" idea fell apart completely. Because of how USDC works, only the giants (institutions) could cash it out for real dollars at full value. Regular shoppers couldn't do that; they had to sell their USDC to other people in the market, often at a loss. So, the giants pulled their money out to get the full value, while regular shoppers dumped their coins into the shops to try to sell them. If you had just looked at the total number of coins moving, these two opposite actions would have canceled each other out, making it look like nothing happened. But when you separate the groups, you see a clear split: one group running for the exit, the other trying to get cash.
What This Means
The paper suggests that we can't just look at the total volume of crypto to understand what's happening. We need to see who is moving the money. The authors show that by using a government registry to track these shops directly, we can see the real story: regular people and big institutions react very differently to stress, and stablecoins aren't the magic safety net some people think they are. This method gives regulators a clearer, more honest picture of how digital money flows through a country, without having to guess.
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