Stablecoins are entering mainstream finance. Explore the regulatory tipping point, systemic risk concerns, and what financial institutions must prepare for next.
Stablecoins are already becoming more of a core part of mainstream finance, rather than a niche crypto tool, especially in payments and remittances. This has seen their aggregate market capitalization soar up to about US$250-280 billion, and almost all of this is dollar-pegged tokens such as Tether (USDT) and USDC (ECB, 2025).
This increase, together with the more recent regulation trends, including the MiCA regime of the EU and the GENIUS Act of the U.S., is creating a regulatory tipping point. Simultaneously, the question of systemic risks created by the run, the reserve management, and the financial contagion issue is becoming a burning subject for central banks and other financial authorities.
Table of Contents
1. Stablecoins in Mainstream Financial Infrastructure
1.1. Institutional Adoption by Banks and Fintechs
1.2. Cross-Border Payments and Remittances
1.3. Yield-Bearing Stablecoins and Real-World Asset Tokenization
2. Regulatory Tipping Points
2.1. EU’s MiCA Framework and Systemic Safeguards
2.2. U.S. Regulation: GENIUS Act and Monetary Implications
2.3. Global Regulatory and Systemic Risk Concerns
3. Systemic Risk Assessment and Financial-Stability Threats
3.1. Concentration Risk and Reserve Management
3.2. Redemption Runs and Fire-Sale Dynamics
3.3. Monetary Policy and Capital Flow Implications
Conclusion
1. Stablecoins in Mainstream Financial Infrastructure
1.1. Institutional Adoption by Banks and Fintechs
The stablecoins now have a broad application by banks and other fintechs, with an estimated 90% of them finding some application (Stablecoin Insider, 2025). The main attraction is the speed of settlement: only about half of the respondents claim to have transaction times of under 5 seconds, in contrast with over a few days for wire transfers.
The potential of stablecoins is showing to be enormous as well, with US$27.6 trillion in payments reported by PaymentsCMI, and this means that they are becoming a cash layer on-chain. This institutionalized incorporation translates into an increase in trust and maturity of operations.
1.2. Cross-Border Payments and Remittances
Stablecoins have been used as a major tool to conduct cross-border remittances by providing quicker and cheaper options compared to the previous correspondent banking networks. They are actively deployed in more than 50 countries with possible weak conventional infrastructure.
Over 250,000 on-chain transactions in the stablecoins drove over US$8.9 trillion in total in the first half of 2025 alone (Stablecoin Insider, 2025), indicating that they are increasingly shaping digital finance ecosystems and are becoming very important.
1.3. Yield-Bearing Stablecoins and Real-World Asset Tokenization
Issuers are also issuing yield-bearing stablecoins pegged to U.S. Treasuries, allowing holders to earn coupon payments. In addition to Treasuries, real-world assets (receivables, credit portfolios, and real estate) are being collateralized by stablecoins and the utility is increasing.
Such tokenization is an indicator of infrastructure maturity, and the regulators and treasurers are scrutinizing stablecoins and approaching them as bank money, which implies their role in the core financial system.
2. Regulatory Tipping Points
2.1. EU’s MiCA Framework and Systemic Safeguards
The Markets in Crypto-Assets Regulation (MiCA) of the EU has developed a formal regulatory framework for stablecoin issuers. The European Systemic Risk Board (ESRB) warns that co-issued EU and non-EU stablecoins may lead to the concentration of redemption risks in the EU, which may pose systemic risks.
ESRB suggests that regulatory cooperation across borders, increased supervision, and possible legal changes should be in place in 20262027 in order to protect financial stability.
2.2. U.S. Regulation: GENIUS Act and Monetary Implications
The U.S. GENIUS Act will require 1:1 stablecoin support of secure assets like U.S. dollars or short-term Treasuries. Researchers observe that the Treasury holdings of about $98.5 billion at Tether in Q1 2025 can place pressure on the short-run Treasury yields downwards.
The Bank of International Settlements (BIS) emphasises the possibility of stablecoins disrupting the capacity of central banks to conduct monetary policy in case they are embraced as a major mode of making payments.
2.3. Global Regulatory and Systemic Risk Concerns
The stablecoins may lack adequate liquidity in terms of reserve assets, posing a run risk in case of confidence shocks.
Close attachment to conventional finance may cause contagion by forced fire-sales in the event of a massive redemption by the holders. Scholarly models suggest hybrid frameworks of combining stablecoins and central bank real-time liquidity support to overcome runout.
3. Systemic Risk Assessment and Financial-Stability Threats
3.1. Concentration Risk and Reserve Management
The market is dominated by two U.S. dollar-denominated stablecoins, including USDT and USDC, the latter being 64% as of Q2 2025 (Stablecoin Insider, 2025). Squeezed concentration of the U.S.
Treasuries are a source of liquidity and market risk. The lack of reserve management or unexpected redemption requirements might destabilize the peg, redemption of stablecoins at par.
3.2. Redemption Runs and Fire-Sale Dynamics
According to ESRB analysis, the annual risk of running with stablecoins is 3-4 %(Stablecoin Insider, 2025). Individuals who do simultaneous redemption can push issuers to sell assets used to back the issuance, which produces fire-sales that spread to wider financial markets. Systemic feedback loops are increased by illiquid reserves, especially in times of market downturns, and this increases the likelihood of financial instability.
3.3. Monetary Policy and Capital Flow Implications
The central banks will lose control of the money supply and interest rates unless stablecoins are widely adopted.
They might make it easy to engage in rapid capital outflows in emerging markets to dollar-pegged tokens at the expense of monetary sovereignty. The issuance across national boundaries may take advantage of regulatory loopholes, increasing systemic and jurisdictional risk.
Conclusion
The stablecoins are no longer a marginal crypto trend; they have firmly integrated into conventional finance, allowing institutional payouts, international remittances and yield offerings. Nonetheless, the integration introduces systemic weaknesses such as risk, concentrated reserves, possible peg failure, and monetary policy interference.
Some regulatory frameworks, like the MiCA by the EU and the GENIUS Act of the U.S., are meant to curb these risks, yet the incentives are high. Absent strong global collaboration, liquidity insurance, and stringent oversight, the stablecoins may also become a real risk to the financial system, and it is crucial to take a proactive regulatory step in the next few years.
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