Why a stablecoin depegs
A peg holds because firms that deal with the issuer can swap the token for its backing at par, and so buy any discount away. The price slips when that arbitrage is in doubt or out of reach:
- Reserve doubt: part of the backing is lost, frozen or unproven
- Redemption stops: the issuer or its banks are closed or overwhelmed
- Mechanism failure: an algorithmic design enters a run
- Thin liquidity: large sales hit a shallow market or pool
Two depegs
In May 2022 the algorithmic stablecoin TerraUSD fell from one dollar to a few cents over a few days, as the Bank for International Settlements records.
On 10 March 2023 Circle, the issuer of USDC, said that it could not withdraw $3.3 billion of the token's reserves, about 8%, from the failed Silicon Valley Bank. A US Federal Reserve note puts USDC's lowest price at 86 cents, and its full recovery on 13 March 2023, when Circle began processing redemptions.
How platforms prepare for a depeg
A product that prices, holds or settles in a stablecoin carries the risk for as long as it holds a balance. Common controls are a price feed drawn from several markets, limits on the float held in any one token, automatic pauses on conversions when the price leaves a band, and prompt conversion of merchants' receipts into money.
Where a depeg shows up in a platform
Modules that do the work
- FXCurrency conversion with live rates, your margins and the liquidity provider you choose.
- Market dataLive and historical prices for crypto, stocks and FX, from the data vendors you choose.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
Platforms that need it
Guides that go deeper
Where it is written
The laws and standards this page's facts come from.
- BIS, Annual Economic Report 2022, chapter III, The future monetary system, 26 June 2022
- Federal Reserve, FEDS Notes, In the Shadow of Bank Runs: Lessons from the Silicon Valley Bank Failure and Its Impact on Stablecoins, 17 December 2025
General information, not legal advice: what applies to you depends on your services and your market.