The International Monetary Fund in December 2025 issued a report warning of growing stablecoin risk, saying the instruments could threaten monetary sovereignty and global financial stability. The paper flagged a market capitalization of about $316 billion and cited $23 trillion in 2024 trading volumes to underline the scale and potential systemic impact.
The IMF framed its concern around several mechanisms by which stablecoins could destabilize economies, especially vulnerable ones. It singled out dollarization — the process where residents substitute local currency with a foreign one — as a key channel for rapid capital flight; dollarization occurs when citizens shift savings into dollar-linked assets to preserve value. The report noted that dollar-pegged stablecoins can accelerate this shift in countries with high inflation, citing recent episodes in Argentina and Turkey as contextual examples.
The fund also warned of run risks similar to bank panics: a loss of confidence in an issuer’s redeemability can prompt mass redemptions and de-pegging events. The collapse of TerraUSD and USDC’s brief de-pegging in March 2023 were cited as precedents. Authors underscored how large stablecoin reserves—often parked in short-term U.S. government debt—tie issuers to traditional markets, potentially transmitting stress to banking systems and Treasury markets. The IMF recommended coordinated international action to address these structural vulnerabilities and regulatory gaps.
IMF’s warning on stablecoin risk
The European Central Bank offered a tempered view in November 2025, describing stablecoin-related risks in the euro area as currently minimal, a stance attributed to low adoption and the Markets in Crypto-Assets (MiCA) regulatory framework. The ECB nonetheless warned that rapid adoption or deeper global interlinkages could create spillovers.
Both the IMF and industry actors agree that regulatory fragmentation is a problem, but they diverge on remedies. The IMF urged harmonized, stringent rules to close gaps that enable regulatory arbitrage. Industry voices argue that overly restrictive regulation would stifle innovation and push activity offshore. That tension shapes the global debate over how to balance financial stability with technological progress.
Industry leaders and some experts pushed back against the IMF’s tone and proposed remedies. Amanda Fischer of Better Markets in September 2025 called stablecoins “a solution in search of a problem,” reflecting a broader skepticism among some consumer-protection advocates. The sector countered that for millions in inflation-hit economies, stablecoins function as a practical store of value and a lower-cost channel for cross-border payments and remittances.
Providers acknowledge the risks the IMF outlined and point to industry responses: security audits, evolving risk-management practices and more transparent reserve attestations. Proponents also highlight yield opportunities within decentralized finance, where returns cited by market participants range from roughly 4% to as high as 55% APY, and argue stablecoins can coexist with central bank digital currencies rather than displace them.
The report sharpens a policy crossroads: strict, harmonized rules to curb systemic risk versus lighter regimes that preserve innovation.
