The European Central Bank has raised fresh concerns about the rapid growth of stablecoins, cautioning that their expanding role in global finance could eventually drain deposits from eurozone banks and introduce new risks to both European and U.S. markets. In its latest assessment, the ECB noted that the stablecoin sector—now valued at more than $280 billion—has become increasingly concentrated, with Tether’s USDT and Circle’s USDC controlling nearly 90% of the entire market.
Stablecoins are designed to maintain a steady value, often backed by high-quality assets such as U.S. Treasury bills. While this structure has helped them gain traction, the ECB warned that it also connects crypto markets more tightly to traditional financial systems. Because issuers hold large amounts of Treasuries, any instability in major stablecoins could spill over into U.S. bond markets, potentially triggering global effects that reach Europe.
Although the popularity of stablecoins is rising, their use in everyday payments remains extremely limited. According to the ECB, around 80% of trading activity on centralised crypto exchanges involves stablecoins, primarily as a tool for buying and selling other digital assets. Cross-border transfers make up another small portion of usage, while routine consumer payments account for just 0.5% of all transactions—indicating that mainstream adoption is still far off.
Despite this, the central bank warned that continued expansion of the sector could put pressure on European banks. Retail deposits are a key source of stable funding for banks across the eurozone, and large-scale movement of customer money into stablecoins could weaken banks’ ability to lend. “Significant growth in stablecoins could cause retail deposit outflows, diminishing an important source of funding for banks,” the ECB said.
The report also highlighted the risk of a sudden run on major stablecoins. If large numbers of holders attempted to redeem their tokens simultaneously, issuers may be forced to offload their reserves quickly. This kind of fire-sale scenario could disrupt Treasury markets, compress liquidity, and transmit stress to European financial institutions. The ECB further noted that stablecoins issued by companies operating across multiple jurisdictions may fall outside the full scope of EU regulations, making it harder to manage large-scale redemptions during a crisis.
For now, the ECB acknowledges that stablecoins have not triggered major outflows from eurozone banks. Much of the sector’s current momentum comes from investor demand and regulatory clarity introduced by frameworks such as the EU’s Markets in Crypto-Assets Regulation (MiCAR). Still, the bank emphasised that the risks are accumulating and urged continued monitoring to ensure that the stablecoin market does not evolve into a threat to broader financial stability.
