The European Systemic Risk Board (ESRB) published a report on systemic risks in the crypto-asset ecosystem and adopted a Recommendation addressing stablecoins issued jointly by EU and non-EU entities. The report flags the growing interconnections between crypto markets and traditional finance and calls for close monitoring, with a particular focus on stablecoins, crypto-asset investment products and multi-function groups. Global stablecoin market capitalisation has more than doubled since the ESRB’s May 2023 report, partly reflecting US policy developments promoting US dollar-denominated stablecoins. With stablecoin reserves increasingly held at commercial banks, the ESRB highlights the need for eligible reserve assets in the EU to be high-quality and liquid. The report also points to wider access to crypto-asset investment products by institutional and retail investors and to supervisory challenges posed by multi-function groups with opaque structures and potential cross-border regulatory arbitrage, calling for formal supervisory cooperation mechanisms and group-level reporting. On third-country multi-issuer stablecoin schemes, it identifies vulnerabilities including run dynamics that could concentrate redemptions at the EU issuer and constraints on cross-border reserve transfers, noting that the Markets in Crypto-Assets Regulation does not explicitly envisage joint issuance and cannot address the associated risks. The Recommendation sets out a two-pronged approach: the European Commission is urged to clarify by end-2025 that such schemes are not permitted under the current MiCAR framework, and if no clarification is provided, relevant authorities are urged to mitigate risks via safeguards including enhanced supervisory measures, closer international cooperation and legal reforms. Most safeguards are to be implemented by end-2026, with the remainder by end-2027, and the ESRB will monitor implementation with addressees required to report actions taken and justify any inaction.
European Systemic Risk Board 2025-10-20
European Systemic Risk Board publishes crypto systemic risk report and recommends action on third-country multi-issuer stablecoins
The European Systemic Risk Board (ESRB) released a report on systemic risks in the crypto-asset ecosystem, focusing on stablecoins and their ties to traditional finance. The ESRB calls for enhanced monitoring and supervisory cooperation, especially for stablecoins issued by multi-function groups and third-country multi-issuer schemes. A Recommendation urges the European Commission to clarify the prohibition of such schemes under the Markets in Crypto-Assets Regulation (MiCAR) by end-2025, with safeguards by end-2026.