European Central Bank warns stablecoins pose systemic risk to banks

The European Central Bank (ECB) issued a warning that stablecoins, such as Tether (USDT) and Tether Gold (XAUT), could threaten the stability of the banking sector. The ECB said a large shift of customers to stablecoins could drain reserves from banks, reducing liquidity and increasing the risk of a banking‑system shock. It highlighted that stablecoins are backed by assets like fiat currencies or precious metals, which could bypass traditional banks and undermine their role in the financial system. The ECB is also developing its own digital‑currency alternative to address these concerns.

The warning underscores regulators’ growing focus on crypto‑related assets and their potential impact on the broader economy, signalling that authorities may consider tighter oversight of stablecoins to protect financial stability.