Erebor Bank's Free Stablecoin Cash-Out Policy Faces Arbitrage

Erebor Bank attracts crypto customers by offering free cash exchanges for Circle and Tether stablecoins, but some professional trading firms have exploited this policy for arbitrage, resulting in losses for the bank. This indicates that stablecoins may not necessarily maintain a $1 price in actual transactions, as redemption costs, liquidity differences, and de-pegging risks can lead to price deviations, posing challenges for a new wave of stablecoin-friendly banks.

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