[ArtTimeInvestor]

    1:1 cash/cash-equivalent reserves, which means the
    best they can do is things like US treasuries /
    money-market funds

Whether US Treasuries are "cash equivalent" is debatable / depends on the specifics. A dollar is worth a dollar tomorrow. A 10-year US treasury might not.

Are you saying the holder of a stable coin is not taking a higher long-tail risk than the holder of a dollar in a checking account of a bank?

[krrishd]

Yeah that's a good flag.

To be even more specific though, "cash equivalent" and the sorts of treasuries that implies are specifically short-duration ones (ie. this cash cannot be parked in a 10-year US treasury either)

Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount"

https://en.wikipedia.org/wiki/Cash_and_cash_equivalents