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crypto.news 2025-07-04 16:37:04

Stablecoin banks like Erebor could inherit DeFi’s weakest links, says Web3 security firm

As Erebor fills the void left by the collapsed SVB, experts are warning about the potential risks of stablecoin integration with banking. Stablecoins are increasingly integrating with traditional finance, which presents both risks and opportunities. Amid the launch of a stablecoin-powered bank, Erbor , backed by Palmer Luckey and Palantir’s Joe Lonsdale, crypto is becoming increasingly exposed to DeFi. Mitchell Amador, CEO of the blockchain security firm Immunefi, shared his insights with crypto.news on this topic. According to Amador, the integration between banks and DeFi protocols carries several structural trade-offs. Notably, banks will gain access to more functionality but also become more exposed to risk. “This proposal to use stablecoins so ambitiously is actually very natural. And it’s probably going to be, at this rate, the future of fintech and banking more broadly. However, this approach carries risks. By exporting most of your underlying ledger and making your bank products widely interoperable with a broader financial ecosystem, you become reliant on that ecosystem — especially on stablecoin standards and the smart contracts behind them — and responsible for securing them,” Mitchell Amador, Immunefi. You might also like: Hackers keep exploiting audited DeFi protocols: What’s missing? | Opinion Banks will have to learn DeFi security Most banks rely on regulated and closed systems, including SWIFT and Fedwire, for transfers. On the other hand, DeFi protocols are controlled by third parties, relying on smart contracts that could have vulnerabilities. “You also develop a very particular focus on crypto authentication and crypto security, especially in the context of treasury management. Not all banks will succeed in this endeavor. Consider that most exchanges are effectively stablecoin-based banks today, with one loose bridge out into the fiat world. That’s basically what is being proposed here as well,” Mitchell Amador, Immunefi. In recent years, crypto firms have had issues getting access to banking services, which saw the business as too risky. One bank, SVB, which regularly served crypto clients, collapsed in 2023 , due to its reliance on U.S. Treasury yields. Read more: $2.4B lost in 2025 H1 crypto hacks — exchanges and DeFi hit hardest: report

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