Stablecoins must “urgently” be brought under increased regulatory oversight before they can become a risk to financial stability, according to the
“Financial stability risks from stablecoins are currently still limited in the euro area, but if growth trends continue at their current pace, this may change in the future,” the ECB said in a macroprudential bulletin published Monday.
The institution said that with some stablecoins already playing critical roles in providing crypto markets with liquidity, there could be significant spillover should a large stablecoin fail. It also warned of “contagion effects” if links between digital assets ...