The ECB’s Olaf Sleijpen warns that rapid growth and widespread use of dollar-backed stablecoins could become systemically important, potentially triggering market turbulence if large redemptions occur and forcing the ECB to adjust monetary policy.

Stablecoins are cryptocurrencies designed to maintain stable value by pegging to assets like the U.S. dollar or other traditional currencies.

Many stablecoins are backed by U.S. Treasuries, and large-scale redemptions could trigger systemic global financial risk and test euro-area financial stability.

MiCA provides a European regulatory framework for stablecoins, but questions remain about effective implementation and ongoing oversight to mitigate systemic risk.

Stablecoins exceeded $300 billion in market cap in 2025 amid rapid expansion and regulatory shifts, underscoring rising systemic importance and policy challenges for Europe.

The risk is framed as a systemic liquidity and policy transmission threat, not merely an isolated crypto-market issue.

In a Financial Times interview, Sleijpen cautioned that digital tokens are growing in significance and could become systemically relevant if U.S. stablecoin issuance continues to rise.

European banks are pursuing a euro-backed stablecoin initiative to offer a regulated digital cross-border payments alternative, aiming to resist dollar dominance and preserve monetary sovereignty.

ECB and ESRB warn about vulnerabilities in multi-issuer stablecoin schemes that could cause liquidity squeezes in the EU, potentially constraining credit availability.

Tether dominates the stablecoin market with about $184 billion in market capitalization, while usage and settlement volumes have surged, with monthly volumes rising and business-to-business payments growing share.

USDT and USDC lead the market, with USDT market cap rising toward $183 billion and USDC climbing to about $74 billion over the past year.

Analysts project the global stablecoin market could reach roughly $3.7 trillion by 2030, signaling significant growth and regulatory hurdles ahead for global finance.