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In the US, banks also pay FDIC insurance premiums. A stable coin could run the same way - buy insurance on the portion of the deposits that they gamble with.

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Yet again cryptocurrency advocates independently rediscover why financial regulations exist and are good

It reminds me of junior devs reimplementing existing functions thinking they'll be faster just to discover that they're either slower or not completing the task, but instead of losing a few hours of work we're playing with billions of $

Wouldn't really work. Stablecoins operate in highly correlated markets, so if one goes down then presumably, others should go down.

Also, the government is a highly diversified insurer that can create more the underlying asset it is insurring.

> Stablecoins operate in highly correlated markets

Do they have to? Is there any reason they couldn't hedge that money?

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