The Federal Reserve has expressed concern about the risks associated with stablecoins issued by non-bank entities. In April, the committee discussed the need for regulatory measures to ensure financial stability.
Federal Reserve's Concerns Over Non-Bank Stablecoin Issuers
During the meeting of the Community Depository Institutions Advisory Committee (CDIAC) on April 10, committee members voiced concerns that stablecoins issued outside the banking sector could lead to significant outflows of bank deposits. They drew an analogy with the impact of money market funds in the late 20th century, emphasizing potential systemic risks. The committee recommended that these stablecoins be included in a regulatory framework similar to that of bank-issued counterparts.
Legislative Efforts and Market Analysis on Stablecoins
The first stablecoin, Tether (USDT), was launched in 2014 and as of May 14, 2025, it maintains its price at $1.00 with a market cap of $150.34 billion. Analysis by the Coincu research team shows that proposed regulations could reduce risks associated with stablecoins in the banking ecosystem. Enacting a unified regulatory framework could ensure more stable market operations.
Potential Consequences for the Banking System
The committee also noted that the unregulated nature of non-bank stablecoin issuers presents a possibility for regulatory arbitrage and challenges to financial stability. "The committee believes that such stablecoins may accelerate the outflow of bank deposits and weaken the ability of community banks to provide loans to small and medium-sized enterprises and households."
The Federal Reserve is expected to continue considering the necessity of regulating stablecoins to prevent potential risks to the financial system. Implementing a unified standard for both bank and non-bank issuers may play a crucial role in maintaining financial stability.
