The European Systemic Risk Board (ESRB) has released a report highlighting systemic risks associated with crypto-assets, focusing on stablecoins, crypto-asset investment products, and multi-function groups. The report emphasizes the growing integration of crypto-assets with traditional finance and warns of vulnerabilities from stablecoins jointly issued by EU and non-EU entities.
The global stablecoin market has more than doubled since May 2023, partly due to US policies promoting dollar-denominated stablecoins. Their reserves, often held in commercial banks, increase financial interconnections between crypto and traditional finance, underlining the need for high-quality, liquid reserve assets in the EU.
Crypto-asset investment products are becoming more accessible to both retail and institutional investors, further integrating the sector into mainstream finance. Multi-function groups—offering crypto and other financial services within the same corporate group—may operate with opaque structures and cross-border regulatory arbitrage, posing supervisory challenges. The report calls for formal cooperation mechanisms and group-level reporting to address these risks.
A particular concern is stablecoins jointly issued by EU and third-country entities. The ESRB warns that runs on such stablecoins could strain EU reserves, delay redemptions, and be worsened by third-country restrictions on reserve transfers. Current MiCAR rules do not explicitly cover joint issuance, leaving gaps in regulatory protection.
To address these risks, the ESRB issued Recommendation ESRB/2025/9. It urges the European Commission to clarify that such schemes are not permitted under MiCAR by the end of 2025. If no clarification is provided, EU and national authorities should implement safeguards, including enhanced supervision, international cooperation, and legal reforms, mostly by the end of 2026. The ESRB will monitor implementation and require reporting to the European Parliament, the Council, and the Commission.
Third-country multi-issuer stablecoin schemes involve EU entities partnering with non-EU counterparts to issue fungible, legally identical stablecoins, with reserves split across jurisdictions. This setup can expose EU holders to risks if redemptions are sought in Europe, leaving them vulnerable to financial instability.
