The IMF has issued a comprehensive analysis of the growing stablecoin sector, which assessed whether current global regulations can effectively address the challenges.
Among the findings in the briefing paper on “Understanding Stablecoins,” released on Thursday, the IMF examined how countries such as the United States, the United Kingdom, Japan, and the European Union have approached efforts to formulate regulatory frameworks for stablecoins.
The IMF report highlighted that emerging regulations may help mitigate risks to macroeconomic and financial stability. However, it did identify an uneven environment that featured diverse regulatory approaches and issuance structures.
The IMF stated on a social media platform that stablecoins can expand financial access and drive innovation, but also cause currency substitution and market volatility. Global cooperation on regulation is essential. The Fund is working with the Financial Stability Board (FSB), the Bank for International Settlements (BIS), and others “to close gaps and improve oversight,” the IMF added.
Is the expansion of stablecoins driving market inefficiencies and risks?
The IMF said that the proliferation of new stablecoins across different blockchains and exchanges raises concerns about inefficiencies stemming from a potential lack of interoperability. The organization noted that this growth can create disparities and obstacles among countries due to varying regulatory frameworks and transactional hurdles.
According to the report, the largest stablecoins by market capitalization, Tether’s USDT and Circle’s USDC, were “backed mostly” by short-term US Treasuries, reverse repo collateralized with US Treasuries, and bank deposits. Forty percent of USDC’s reserves and approximately 75% of USDt’s reserves consisted of short-term US Treasuries, with Tether’s stablecoin also holding 5% of its reserves in Bitcoin.
The vast majority of stablecoins worldwide include coins pegged to the US dollar. However, a small number of issuers have denominated their offerings in different currencies, such as the euro. As of December, the total market exceeds $300 billion.
US GENIUS Act and EU MiCA create divergent stablecoin frameworks
Following the signing of the GENIUS Act into law by US President Donald Trump in July, regulators have been moving to establish a comprehensive framework for payment stablecoins in the United States. The law imposes strict reserve requirements, bans yield-bearing stablecoins, and formally integrates stablecoin issuers into the US financial system.
A new report from blockchain security auditor CertiK indicates that America’s new approach to stablecoin regulation is reshaping global liquidity flows and driving a sharp structural split with the European Union’s Markets in Crypto-Assets (MiCA) regime, effectively creating separate US and EU stablecoin liquidity pools.
According to the report, the US digital asset market entered a new phase of regulatory clarity in 2025, with federal legislation and administrative reforms now broadly aligned on how digital assets are issued, traded, and custodied.
While the framework offers long-awaited regulatory certainty for US issuers, the report warns that it also deepens the global divide with the EU’s MiCA regime, creating a separate US liquidity pool and effectively fragmenting the global stablecoin market.
For this reason, CertiK anticipates that stablecoin liquidity will become highly segmented by jurisdiction, which will give rise to new cross-border settlement issues and potentially lead to regional stablecoin arbitrage.
Despite the MiCA regime of the European Union following the US GENIUS Act’s requirement for full redemption at par and prohibition on yield for stablecoins, it has met resistance due to the addition of banking concentration risk, as the rules mandate a substantial fraction of issuer reserves to be held within EU-based banks.
Tether’s CEO, Paolo Ardoino, cautioned that such a structure could lead to “systemic risks” for issuers, as under the fractional reserve system, banks typically lend out a sizable portion of their deposits.
The smartest crypto minds already read our newsletter. Want in? Join them.
Source: https://www.cryptopolitan.com/imf-sets-stablecoin-risk-principles/
