The European Central Bank warned that widespread adoption of euro-denominated stablecoins could drain deposits from commercial banks and weaken monetary policy transmission.
In a new research paper, the ECB said stablecoins could “weaken the effectiveness of monetary policy” and “hamper lenders’ ability to support the real economy” if funds migrate from bank deposits into tokenised payment rails.
The warning comes as Visa expands stablecoin-linked cards to more than 100 countries via Bridge after reporting volumes that “more than quadrupled” last year, while Mastercard partnered with SoFi to launch SoFiUSD for settlement across its global network.
Regulators argue that large-scale euro stablecoin usage could face tight constraints under Europe’s MiCA framework, particularly around reserves, disclosure and access to central bank backstops.
Policymakers are also concerned that stablecoin “rewards” or yield-like features could mirror money-market-fund fragility if rapid withdrawals occur during stress periods.
Crypto markets reacted calmly, with Bitcoin trading near $67,000–$68,000, Ethereum around $2,000 and Solana in the mid-$80s, as traders viewed the paper as a medium-term structural issue rather than an immediate shock.
The episode underscores how stablecoins have moved from peripheral crypto instruments to a central policy battleground between banks, central banks and payment networks integrating tokenised settlement into mainstream finance.
At the time of reporting, Bitcoin price was $68,149.40.