With two issuers accounting for most of the market, authorities are paying closer attention to how their reserves would hold up under stress, and to the effect on the banks and government bond markets in which those reserves are placed. Four issues stand out: how quickly reserves can be turned into cash when many holders redeem at once; how concentrated reserves are in a few banks, counterparties or governments; how stress can travel between a large stablecoin and banks or government bond markets; and what happens to holders if an issuer fails.

Holders of regulated stablecoins are entitled to redeem at short notice, but not all reserve assets can be turned into cash as quickly. In its October 2025 peer review of crypto-asset and stablecoin rules across jurisdictions, the FSB found broad agreement on which assets may back stablecoins, but differing approaches to how much must be available at short notice and how quickly holders must be paid. Among the jurisdictions reviewed, only the EU and Japan required a minimum share of reserves in bank deposits, and neither the EU nor the US had set a specific payout deadline. The latest proposals shift the focus from what reserves may be held to how quickly they can be turned into cash and holders paid. They would set payout deadlines, give authorities room to slow redemptions in a crisis, and require a minimum share of reserves to be available within days.

The Federal Reserve Board's September proposal on reserve, capital and risk management requirements for issuers it will supervise under the GENIUS Act would generally require redemptions to be paid within two business days. The Board could extend this period if an issuer's safety and soundness or financial stability were at risk, or in the public interest. In their responses to the European Commission's targeted consultation on the review of MiCA, which ran from May to August and benchmarked the regulation against market developments and other jurisdictions' frameworks, the European Banking Authority (EBA) and the Single Resolution Board (SRB) called for MiCA to specify how quickly redemptions must be paid in normal conditions. The SRB also suggested that authorities be able to approve temporary crisis measures where immediate redemption could force a disorderly sale of reserves.

EU authorities are also reconsidering MiCA's requirement to hold at least 30% of reserves (60% for significant tokens) as bank deposits. The European System of Central Banks (ESCB) proposed replacing it with minimum shares of reserves maturing within one and five working days, using as a minimum starting point the floors in EBA draft standards that the Commission has yet to adopt: 20% and 30%, doubled for significant tokens. The EBA itself said that such liquidity buckets, combined with maturity limits and diversification, might be more risk-sensitive than a fixed deposit share, subject to a cost-benefit analysis. MAS is considering the opposite route: in its September consultation on proposed amendments to the Payment Services Act, it sought views on a minimum share of reserves in cash or bank deposits. It would also introduce stress testing at least quarterly and contingency funding plans. The FSB had listed both among the critical gaps across jurisdictions and recorded both as still under consideration in Singapore.

The UK’s final rules, published at the end of June, calibrate these floors by tier. The Financial Conduct Authority (FCA) requires all issuers to hold at least 5% of backing assets in on-demand bank deposits, with issuers using longer-dated assets also required to keep a core of short-term assets at least equal to the highest daily redemption rate observed over the previous 180 redemption days, and to pay redemptions by the end of the next business day. For systemic sterling stablecoins, the Bank of England would require 30% of backing assets in unremunerated central bank deposits, reduced from the 40% it consulted on in 2025, with the remainder in UK government debt maturing within six months, and redemption within 24 hours. It rejected requests to admit commercial bank deposits or money market funds on contagion grounds.

Holding reserves with a few banks or counterparties ties a stablecoin's backing to their soundness. When Silicon Valley Bank failed in March 2023, USDC came under a run because its issuer held part of its reserves there as uninsured deposits, an episode cited by both the ESCB and the SRB. The FSB review found that frameworks lacking adequate arrangements to mitigate concentration risk were not fully in line with its recommendations. The GENIUS Act had left diversification requirements to rulemaking, and the EU's limits on deposits with individual banks were set out in EBA draft standards, where they remain.

Recent proposals would require issuers to spread reserves across banks and counterparties and, in the United States, add capital charges on exposures that are not fully protected, such as uninsured bank deposits. In the EU, attention is also widening from concentration in individual banks to concentration in individual governments' bonds.

The Federal Reserve Board's proposal would require issuers to diversify reserves so that full backing holds under stress, limiting concentration in uninsured deposits at one or a few banks and in reverse repos with one or a few counterparties. It would also apply a 2% capital charge to uninsured deposits and undercollateralised reverse repos held as reserves. In the EU, the EBA's draft standards would cap deposits with any one bank at between 5% and 25% of reserves, depending on the bank's size and systemic importance, and at 1.5% of the bank's total assets. The ESCB called for their prompt adoption and for lower limits per counterparty for significant tokens. It also called for diversification across government issuers, noting that the draft standards would cap exposure to a single government at 35% of reserves.

At scale, stablecoin reserves tie issuers to the banks that hold their deposits and to the government bond markets in which they invest. The FSB review had already noted that issuers' reserve holdings had become comparable to those of foreign governments or large money market funds, concentrated at the very short end of the yield curve, and that stablecoin growth could draw deposits away from banks. The requirements it assessed, however, were aimed at issuers, and it found comprehensive monitoring of links between crypto-asset markets and the traditional financial system lacking.

In its response to the MiCA consultation, the ESCB set out how stress could travel along these links. Deposits from issuers tend to be less stable than the retail deposits they replace and attract a 100% outflow rate under the liquidity coverage ratio. Where a large stablecoin's deposits are significant relative to a bank's assets, a run on the stablecoin could trigger a run on the bank. The ESCB also warned that sales of reserves concentrated in a few governments' bonds could push up yields, a particular concern for the fragmented euro area bond market should euro stablecoins grow significantly. The latest discussions turn to the banks and markets on the other side of these links, with options to cap exposures, make the links more visible to authorities and single out systemically important stablecoins for additional requirements.

To cap exposures, the ESCB floated an overall limit on the deposit funding banks may receive from issuers. MAS sought views on limits on individual holdings and on issuer-specific caps on total issuance, noting that the latter could contain the impact of an issuer's failure. To make the links more visible, the SRB called for resolution authorities to be informed of banks' material links to stablecoins and for aggregate issuer deposits at banks to be monitored. The Federal Reserve Board's proposal would require weekly reports on issuance, redemptions and reserves, and MAS would require issuers and licensed intermediaries to report on stablecoins circulating in Singapore. MAS would also gain the power to designate stablecoins as systemic based on how large they are, how closely they are linked to payment systems and the wider financial system, and how easily they could be replaced. Designated stablecoins would be subject to additional requirements.

Where frameworks address issuer failure, they generally expect the issuer to sell its reserves and pay out holders. For a large issuer, such sales could depress asset prices and spread stress to banks, as the SRB has noted. Recovery and resolution planning was among the critical gaps identified by the FSB. Where plans were required, as in the EU and Hong Kong, they provided for recovery and, failing that, an orderly redemption or wind-down. In the United States, the GENIUS Act gave holders' claims on reserves priority in bankruptcy and required regulators to study how issuer insolvencies should be handled.

For the largest issuers, the debate is now moving from orderly liquidation to resolution. Under its consultation, MAS would expect issuers of designated systemic stablecoins to have recovery plans and could require a failing issuer of such a stablecoin in Singapore to undergo resolution where this is necessary in the public interest. Resolution planning requirements would follow. In the EU, the ESCB and the SRB both recommended a tailored crisis management regime for non-bank issuers of significant tokens, the SRB arguing that liquidation may not always suffice if such tokens grow significantly in importance. The EBA, noting that MiCA's recovery and redemption plans are as yet untested by market events, suggested the Commission assess tools modelled on bank resolution to transfer a failing issuer's business and reserves to another issuer. The Commission's consultation had itself sought views on a dedicated resolution regime and emergency liquidity support for e-money institutions issuing tokens.

For issuers more generally, the focus is on when a wind-down is triggered and on the strength of holders' claims, including across borders. The Federal Reserve Board's proposal would require an issuer whose reserves fall below full backing to notify the Board, liquidate its reserves and redeem its stablecoins, unless the Board directs it to proceed with a plan to restore full backing promptly. A capital shortfall at a quarter-end would require a plan to restore compliance and, if it persisted to the next quarter-end, liquidation and redemption. In their joint statement on stablecoins of 14 July, the UK and US governments each said they would seek a framework giving holders a clear and protected claim on reserves, with priority over other creditors, and international coordination of cross-border insolvency proceedings.

The IMF paper estimates that, from the perspective of nearly every country, 99% of stablecoins are issued abroad and pegged to a foreign currency. At the same time, the FSB, in its latest assessment of global stablecoins released on 12 October, stresses that the treatment of foreign-issued stablecoins is still uncertain or undefined in many jurisdictions, raising concerns about how authorities can oversee tokens whose issuers, reserves and holders are spread across borders. Recent proposals and consultation responses address this on several fronts, from the terms on which foreign stablecoins may be offered locally to the data needed to establish where their holders are.

Host authorities have no direct reach over foreign issuers, yet residents can buy their tokens on local or foreign platforms or peer to peer. The FSB's 2025 peer review found that only some jurisdictions, including the EU, Hong Kong and Japan, restricted local trading of stablecoins, for some or all users, to locally licensed ones, and said foreign-issued stablecoins should meet domestic requirements before being traded locally. The latest proposals open a route to market for foreign stablecoins regulated under comparable regimes, and make local intermediaries the main point of control for those that are not.

Under MiCA, stablecoins may be issued and offered only by authorised entities established in the EU. In its response to the MiCA consultation, the EBA saw merit in an EU equivalence regime as a baseline for market access, subject to strict reciprocity. MAS would recognise a limited number of foreign stablecoins whose home regime it judges substantively equivalent, under a status distinct from MAS-regulated stablecoins. In their joint statement of 14 July, the UK and US governments said they intend to explore a pathway for stablecoins issued in each jurisdiction to access the other's market. The GENIUS Act already provides such a route: from July 2028, US service providers will be able to offer only stablecoins from US-licensed issuers or from foreign issuers that meet the Act's conditions, including supervision under a regime the Treasury finds comparable. For tokens outside these routes, intermediaries carry the burden. The European Securities and Markets Authority (ESMA) asked for MiCA to state explicitly that authorised crypto-asset service providers may not provide services in relation to stablecoins that do not comply with the regulation, and the Anti-Money Laundering Authority (AMLA) supported this position. On 8 October, ESMA also issued an opinion to national supervisors setting out its expectation that service providers do not maintain or facilitate access to such tokens for EU clients through any of their services, with remaining exposures to be remediated within three months and any continuing services limited to sell-only, conversion, transfer or withdrawal functions.

Some stablecoins are issued by affiliated entities in several jurisdictions. The tokens are interchangeable, but each issuer holds its own share of the reserves under its own rules. The FSB’s 2025 peer review reported concerns that each co-issuer could be liable for all tokens in circulation while holding only part of the reserves, and that in stress holders would have an incentive to redeem wherever payout is fastest and cheapest. Its October note adds that redemptions could concentrate on a single issuer, that moving reserves between issuers may break down in stress, and that, where holders’ locations cannot be established, their claims could be unclear in insolvency.

Stances range from exclusion to conditional acceptance. The Bank of England, in its June policy statement on systemic stablecoins, does not consider multi-issuance models currently suitable for systemic use in the UK, citing reserve fragmentation, redemption certainty and legal protections across jurisdictions: non-UK issuers of a sterling systemic stablecoin would have to issue through a UK subsidiary, while for non-sterling stablecoins in systemic UK use the Bank would generally defer to the home regime, subject to its own assessment. Where such arrangements are permitted or contemplated, the conditions set or proposed are similar: comparable regulation of co-issuers, aligned redemption terms and reserves that can move between issuers in stress. Authorities also expect enough reserves or liquidity to be kept at home to meet redemptions there, and the EU is considering limiting redemption rights to EU holders.

In Singapore, MAS had ruled out such arrangements in 2023. Under its September consultation, it would now allow a stablecoin issued jointly from Singapore and abroad to be held out as MAS-regulated, provided foreign co-issuers are supervised under a substantively equivalent regime, reserves across all issuers meet the stricter of the regimes’ composition rules, and redemption fees and timelines are comparable. The Singapore issuer would have to hold a share of the reserves proportionate to its risks, and MAS could require additional reserves or liquidity support, such as guarantees or letters of credit.

In the EU, MiCA does not explicitly provide for schemes involving a non-EU co-issuer, although two EU e-money institutions already take part in them. The Commission has yet to answer questions on their permissibility, and its consultation asked if MiCA redemption rights should be limited to EU holders. The EBA rated MiCA’s existing safeguards as only “slightly effective”, since having an issuer in the EU does not necessarily keep reserves or redemption pressure there. The ESCB said that permitting such schemes would require amending MiCA to provide for an EU-level equivalence assessment and for reserves that can move between issuers in stress without interference from authorities, and that the EU issuer should hold a liquidity buffer in the EU. The SRB said the EU issuer should be able to meet redemptions without relying on uncertain or discretionary transfers from abroad.

Foreign currency stablecoins give residents a new way to hold foreign assets. The IMF paper warns that this can undermine capital flow management measures, amounting to a de facto liberalisation of the capital account, and increase currency substitution. For systemically important foreign-currency stablecoins, it adds, central banks' ability to provide liquidity backstops would be severely constrained, if feasible at all. The FSB's October note adds that these risks mean stablecoins could become systemic in emerging market and developing economies at a lower level of use.

The IMF favours sound macroeconomic frameworks, comprehensive regulation and better data over blanket bans, and does not envisage new controls on outflows into stablecoins outside crisis conditions. How demand for foreign stablecoins feeds through to exchange rates depends on market structure: a Bank of Korea issue note published in September found that, because the won is not traded directly against stablecoins on Binance, buying pressure in Korea shows up in a premium on dollar stablecoins, a median 1.67% since 2022, rather than in the exchange rate, and that this link could strengthen as corporations and foreign investors enter the market.

In practice, host authorities are seeking powers to curb foreign stablecoins that become too widely used or fall short of local requirements. In the EU, the ESCB reported that MiCA's limits on the use of stablecoins denominated in non-EU currencies as a means of exchange cannot currently be applied, because users' locations and the purpose of transactions cannot be reliably identified. It proposed that supervisors be able to prohibit new issuance of e-money tokens denominated in non-EU currencies, and require redemption of existing ones, where the European Central Bank (ECB) finds a threat, including to financial stability. MAS would be able to restrict the circulation in Singapore of designated systemic stablecoins issued overseas that fail to meet its requirements, including by directing licensed intermediaries to delist them.

Many rules for foreign stablecoins depend on knowing where holders are located, but this is hard to establish. The FSB's October note finds that the pseudonymity of many blockchain transactions often makes it impossible to trace stablecoin activity to particular countries, and that authorities rely mostly on private data compilers whose methods vary.

Responses so far focus on defining location and extending reporting. The US Treasury's August proposal would treat a stablecoin as issued in the United States if the issuer or the recipient is located there at the time of issuance. Treasury chose this test partly because it is simpler to understand and administer than broader tests of US nexus. In the EU, MiCA requires reserves for tokens held in the EU to be kept there, but does not define what "held in the EU" means. The EBA said EU holdings can currently be estimated only partially. It called for the term to be defined in law and for a mandate requiring issuers and crypto-asset service providers to report data on EU holdings to supervisors.

International efforts to collect such data are at an early stage. In an IMF pilot under the G20 Data Gaps Initiative, only two of the 11 jurisdictions hosting stablecoin issuers reported holdings by residents. To improve coverage, the IMF recommends reporting obligations for issuers and service providers, including at the points where stablecoins are converted to and from fiat currency. The FSB's October note suggests developing a set of monitoring metrics, including on where holdings, redemptions and reserves are located.