What is a primary concern about the stability of stablecoins?

The primary concern about the stability of stablecoins relates to the way they are backed. Many stablecoins are backed by underlying assets, which can include traditional fiat currencies, commodities, or even other cryptocurrencies. When a stablecoin is backed by volatile cryptoassets, it becomes susceptible to dramatic price fluctuations. This volatility can undermine the intended purpose of stablecoins, which is to maintain a stable value relative to the asset or currency they are meant to be pegged to.

For example, if a stablecoin is pegged to a cryptocurrency that experiences sharp price swings, the value of the stablecoin could also fluctuate significantly, defeating its purpose. This concern is pivotal for users and investors who rely on stablecoins for predictable and stable transactions, particularly in use cases like payments, remittances, and decentralized finance.

The other options reflect concepts that are not typically viewed as primary concerns regarding the stability of stablecoins. For instance, stablecoins can be traded on exchanges, held in crypto wallets, and might not necessarily require a bank account to be used, depending on the type of stablecoin and its infrastructure.