IMF Warns Fragmented Stablecoin Regulations Threaten Financial Stability and Cross-Border Payments
The International Monetary Fund (IMF) report titled “Understanding Stablecoins,” published on December 4, 2025, highlights the risks posed by fragmented regulatory frameworks across major economies including the US, UK, EU, and Japan. This patchwork of regulation creates significant roadblocks to financial stability and hampers the efficiency of cross-border payments.
The report points out that issuers can exploit lightly regulated jurisdictions to serve markets with stricter rules, complicating oversight of stablecoin reserves, liquidity management, and anti-money laundering (AML) controls. This regulatory fragmentation is compounded by technical fragmentation, with stablecoins operating on non-interoperable blockchains and exchanges, which increase transaction costs and delay market development.
The global stablecoin market has surpassed $300 billion, dominated by US dollar-denominated tokens. According to the IMF, USDC holds around 40% of its reserves in short-term U.S. Treasuries while USDT has approximately 75% in such Treasuries and 5% in Bitcoin. The widespread use of foreign-currency stablecoins could weaken domestic monetary control, accelerate digital dollarization, and potentially enable the circumvention of capital controls through unhosted wallets and offshore platforms.
The IMF recommends harmonizing stablecoin definitions and implementing consistent rules for reserve assets based on the principle of “same activity, same risk, same regulation.” It also calls for full one-to-one redemption of stablecoins and enhanced coordination on cross-border AML and licensing standards.
Without globally consistent regulation, stablecoins risk bypassing safeguards and transmitting financial shocks internationally. The report cites Europe’s Markets in Crypto-Assets (MiCA) framework and spillover risks identified by the European Central Bank (ECB), while the European Systemic Risk Board (ESRB) advocates for additional protections. The People’s Bank of China views stablecoins as a potential risk, and regulators in the Bank of England and Basel framework are reconsidering capital requirements related to stablecoin exposures.
