Central banks:
— BIS’ Financial Stability Institute argued that while tokenization is transformative but stablecoins face limitations.
Summary: The BIS said that distributed-ledger tokenization of financial assets holds significant promise for payments, securities markets, and cross-border flows — but it expressed caution about stablecoins becoming the backbone of monetary systems, pointing to challenges of “singleness, elasticity, and integrity.” The authors also predicted that tokenized deposits and central-bank-supported tokenized instruments may win over privately-issued stablecoins in the long run. It also called for a ban on the remuneration of stablecoin balances by crypto asset providers (CASPs) and argued that regulatory frameworks must extend oversight to encompass CASPs’ activities related to stablecoins.
Key graf: “Some CASPs already offer products that allow users to earn returns on their payment stablecoin holdings, either directly or by facilitating access to DeFi lending protocols. These offerings have, at times, provided returns higher than those of traditional deposits. For example, in September 2025 some CASPs offered a 4.25 percent Annual Percentage Yield on USDC holdings, more than four times the average US bank deposit rate. Similarly, in January 2025 DeFi lending rates on stablecoins such as USDT and USDC were, on average, 400 basis points higher than the US federal funds rate.”
Crackdowns:
— The EU expanded its sanctions regime to target Russian stablecoin A7A5 (via Politico too $$)
Summary: EU sanctions are for the first time targeting a stablecoin that is pegged to the ruble and linked to the Kremlin’s defense bank, as well as a Moldovan oligarch already under sanctions. The so-called A7A5 stablecoin “has emerged as a prominent tool for financing activities supporting the war of aggression,” the Council of the EU said Thursday, announcing the approval of a series of fresh financial measures.
Key graf: “The cryptocurrency was launched this year by A7, an issuer based in Kyrgyzstan, and founded by oligarch Ilan Shor and Russian-owned PSB. Shor was at the center of the largest banking fraud in Moldova and was sanctioned in 2023 after Moldovan authorities found out he used undeclared money to meddle in the country’s elections, corrupting politicians and promoting pro-Russian stances.
“According to documents leaked this fall, several senior executives from Russian banks such as Sberbank, state development bank VEB, and Standard joined the firm, which turned out to be a channel to circumvent sanctions and procure military components.
Research:
— Artemis Analytics said stablecoin payments have surged since 2023 to a meaningful global level. The analysis is based on data from 33 stablecoin-based payment firms.
Key grafs: “Business-to-business payments represented the majority of the flows, followed by peer-to-peer transfers, followed by card payments (typically debit or prepaid cards linked to a stablecoin wallet), and business-to-customer payments”
“Within the sample of firms surveyed, Tether’s USDT was by far the most popular stablecoin used to settle flows for firms in the study.”
Key charts:
Cash Equivalence take: The really interesting data relates to how stablecoin firms are turning to prefunding providers to help bridge the gap between when stablecoin redemptions are exercised and when fiat hits customer accounts. According to Artemis, the gap is most often filled by short-term capital providers like Arf and Mansa:
— A16z said 2025 was the year that marked crypto’s maturity thanks to the institutional adoption of stablecoins.
Key graf: “Circle’s billion-dollar IPO marked the arrival of stablecoin issuers as mainstream financial institutions. And in July, the bipartisan GENIUS Act passed into law, providing builders and institutions with the clarity they needed to move forward. In the months since, mentions of stablecoins in SEC filings have grown 64%, and a flurry of announcements have continued to follow from major financial institutions.”
Key charts:
Regulation:
— The European Systemic Risk Board said it was concerned by financial stability risks from stablecoins, especially those arising from third-country multi-issuance schemes.
Key grafs: “The potential of stablecoins to disrupt existing financial systems raises concerns about their broader implications for the international monetary system, the transmission of monetary policy, and seigniorage. From a financial stability perspective, stablecoins are vulnerable to runs, which could have systemic consequences for markets in the reserve assets backing them, such as U.S. Treasuries, and could lead to contagion across the wider financial system. They also pose operational risks, including exposure to cyber vulnerabilities, and raise concerns about illicit use, such as money laundering and sanctions evasion. Overall, stablecoins present a significant challenge to traditional financial institutions, prompting them to explore competitive and innovative solutions in response.
“For instance, they may introduce tokenized deposits, which are digital representations of fiat currency issued by banks and recorded on a blockchain, or offer services tailored to CBDCs, such as the digital euro. A key challenge lies in fostering effective international coordination, as the efforts of some countries to position themselves as crypto-friendly hubs could complicate the process of achieving a balanced assessment of risks and ensuring the effective enforcement of appropriate measures. This dynamic may create opportunities for stablecoin issuers to strategically select jurisdictions that best serve their interests. While this report acknowledges the broader context of these issues, it focuses on a selected number of topics relevant to financial stability and macroprudential considerations.”
Cash Equivalence take: The ESRB is urging the Commission to clarify by end-2025 that cross-jurisdictional stablecoin structures, such as those issued by Circle, are not permissible unless robust protections exist, and if not, for EU authorities to impose restrictions or bans by end-2026 (some by 2027).
Specifically, it argues that supervisors should use MiCAR powers to block non-compliant tokens, strengthen oversight of crypto groups, close regulatory loopholes like “reverse solicitation,” and enhance cross-border data-sharing and monitoring of systemic spillovers. Overall, the ESRB wants coordinated EU-level enforcement to ensure stablecoin reserves, redemption rights, and market activities remain fully within EU supervision and financial-stability control.
But there’s more! A new regulatory bugbear relates to “reverse solicitation,” a narrow exemption that allows a crypto-asset service provider (CASP) based outside the EU to serve an EU client but only if the client themselves actively requested the service, without any marketing, outreach, or solicitation from the provider.
The ESRB believes some firms could abuse this loophole — for example, by claiming EU users “requested” access to a foreign stablecoin or platform that’s actually being promoted online or indirectly targeted at EU residents. If exploited, this would let non-EU stablecoin issuers or exchanges circumvent MiCA licensing and supervision, undermining financial stability and consumer protection.
Hence, the ESRB recommends that regulators interpret the reverse-solicitation exemption very narrowly, and closely monitor or restrict its use to prevent regulatory arbitrage — that is, firms operating in the EU without complying with EU rules.
How that will work in practice, though, is another question.
Key charts:
Key stats:
MiCAR-authorized 23 stablecoins (EMTs) issued by 14 entities (as of 15 September 2025)
