It's not. The FDIC is ultimately collateralized by the entire US economy and will change the rules on a whim to collateralize ineligible depositors as seen in the silicon bank fiasco. On paper there is a limit but in practice it is as high as the rich and powerful like.
It's not even a problem if they run out of imaginary money because the fed can simply ease in more to the FDIC via debt shell games.
USDC just holds 90% in government treasuries custodied by blackrock & 10% in cash in a "too big to fail" US bank that's systemically important.
Your local bank has a 0% reserve requirement[1]. Ofc it'll most likely get bailed out by the FDIC (by taxpayers) in case of emergency but US regulated stablecoins are in no way more risky than US banks
Problem is that's held by a private entity, and if coin holders are defrauded no one will be bailing them out, unlike bank depositor or Treasury note holder.
Who says it is a flex? It is simply reality, he who holds the central bank will tilt it and insuring institutions to favor powerful depositors, it's almost an axiom of governance and another reason why founders hated and warned against central banks.
