By European Systemic Risk Board

Financial stability risks are mounting in 2025 as crypto-assets, including stablecoins, go mainstream, buoyed by forceful US policy measures. By mid-2025, the crypto-asset market had reached record valuations, largely driven by US pro-crypto policies aimed at boosting demand for US Treasuries and reinforcing the dollar’s dominance. In this context, the ESRB’s General Board noted in June 2025 that the growing links between the crypto sector and the financial sector should be closely monitored. It also voiced concerns over rising financial stability risks from stablecoins, especially the fungibility of those issued in both the EU and third countries, which can create contagion channels extending well beyond the risks anticipated in the Markets in Crypto-Assets Regulation (MiCAR). Building on the insights provided in its 2023 report, in 2025 the European Systemic Risk Board (ESRB) conducted an in-depth analysis of three key topics chosen for their significance in the evolution of crypto-assets: stablecoins, crypto-investment products (CIPs) and multi-function groups (MFGs) active in crypto-asset markets. These three topics were chosen because they reflect key dynamics of the crypto-asset ecosystem. Stablecoins raise concerns about spillover risks due to their rapid growth, their steadily increasing ties to traditional finance through backing assets, and the risks associated with a potential growing role in payment systems. CIPs highlight the industry’s growing integration into mainstream finance, with such products becoming increasingly and more readily accessible to institutional and retail investors. While MFGs may offer opportunities to address market demand, the scale and concentration of their activities could give rise to risks that are significant from a macroprudential perspective.

Get the report here