The European Central Bank warns of Stablecoin Cross-Border Regulatory Arbitrage Risk, calling for a harmonized regulatory framework worldwide

November 24th: On this day, the European Central Bank issued the Financial Stability Review Preview (the official report will be released on Wednesday). It was shown that by November 2025, the total market value of stablecoins had exceeded $280 billion, accounting for approximately 8% of the entire crypto market. USDT and USDC together accounted for nearly 90% of this, and their reserve assets had reached the scale of the top 20 global money market funds. The European Central Bank report pointed out that if stablecoins were widely used, it might lead to households converting some bank deposits into stablecoin holdings, weakening banks' retail funding sources and increasing funding volatility. Although MiCAR had prohibited European issuers from paying interest to prevent such transfers, banks still called for similar restrictions to be implemented in the United States. Additionally, the rapid growth of stablecoins and their connection to the banking system might also trigger concentrated fund withdrawals during crises. The report emphasized the cross-border "multi-issuer model" risk, warned that EU issuers might have difficulties in meeting global redemption requests, called for the implementation of pre-admission safeguards, and advocated for global regulatory alignment.