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The stablecoin market surpasses $280B, drawing warnings from the ECB about systemic risks and triggering a push for tighter regulation worldwide. Summary ECB warns stablecoins could destabilize banks, with sudden runs risking Treasury market turmoil. U.S. dollar stablecoins dominate, while EU advances with MiCA; regulatory gaps fuel cross-border risk. Major stablecoins hold vast U.S. Treasuries, making issuers significant financial system players. The global stablecoin market has surpassed $280 billion in combined market capitalization, reaching a new record that has drawn increased scrutiny from financial regulators worldwide, according to market data. The European Central Bank (ECB) has issued warnings about potential systemic risks posed by the expanding stablecoin sector, stating that the digital assets could destabilize the financial system by attracting retail deposits away from eurozone banks. According to the ECB, a sudden run on stablecoins could trigger fire sales of reserve assets, potentially disrupting U.S. Treasury markets and leading to a financial crisis without coordinated global regulation. The central bank highlighted several structural weaknesses in its assessment, including risks of de-pegging from underlying currencies, run dynamics similar to traditional bank runs, and growing interconnections with conventional financial systems. Two U.S. dollar-denominated stablecoins currently dominate the market, while euro-denominated alternatives remain marginal, according to market analysis. Growth in the sector has been influenced by regulatory developments, including the full implementation of the Markets in Crypto-Assets (MiCA) regulation in the European Union and recent legislative proposals in the United States. Hong Kong has also advanced stablecoin regulatory frameworks. Stablecoins fuel retail adoption Stablecoins are predominantly utilized for cryptocurrency trading, with the vast majority of transactions on centralized exchanges conducted using these digital assets. Retail adoption for real-economy payments remains limited, according to industry data. Financial stability concerns center on the asset-backed reserve models employed by leading issuers. The reserves held by major…

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Filed under: News - @ November 25, 2025 6:26 am