IMF Warns & Weighs In on the Future of Stablecoins

Stablecoins are becoming an increasingly important part of the digital financial system. The International Monetary Fund (IMF) recently published a paper titled “Understanding Stablecoins”. The paper notes that stablecoins have the potential to significantly change how money moves across borders and how payments are made, by making transactions faster and cheaper.

The paper also highlights several challenges associated with stablecoins, including regulatory oversight, monetary sovereignty, and financial integrity. As stablecoins grow in scale, they can complicate a country’s ability to manage its monetary system. To address these concerns, policymakers and regulators worldwide are actively discussing ways to reduce risks while maximising the benefits as issuance expands and use cases evolve.

• Stablecoin Market Expansion
• Cross-Border Payments Potential
• Regulatory and Integrity Concerns
• Monetary Sovereignty Concerns
• Global Coordination

Stablecoin Market Expansion

According to IMF research, the growing use of stablecoins in cryptocurrency trading and settlement systems has more than doubled their supply over the past two years. Stablecoins, particularly those pegged to the US dollar, dominate the market and act as a bridge between volatile crypto assets and traditional currencies. With an estimated market value approaching $300 billion by the end of 2025, their rapid adoption underscores their increasing role in global finance.

Stablecoins are increasingly used for value transfers, remittances, settlement services, and payments, especially in regions where traditional financial infrastructure is costly or limited. This growth reflects both expanding real-world use cases and ongoing speculative cryptocurrency activity.

Cross-Border Payments Potential

According to an IMF report, stablecoins have strong potential to improve cross-border payments. Traditional international transfers often pass through multiple intermediaries, making them slow and expensive, particularly for transfers to developing countries. In some cases, fees can reach up to 20% of the transaction value.

Stablecoins can improve international payments by leveraging blockchain technology, which enables 24/7 availability, near-instant settlement, and lower transaction costs. This makes payments faster and more accessible, particularly for underserved populations.

Major banks and cross-border payment platforms are exploring pilot programmes that use stablecoins for international business payments and remittances, aiming to increase competition and reduce cross-border transaction costs.

Stablecoins have the potential to reshape cross-border payments and capital flows. They offer opportunities, but also bring new risks—financial integrity, regulatory oversight, consumer protection, capital flow management, monetary sovereignty, and more. Learn more:… pic.twitter.com/AysA8nVd6K

— IMF (@IMFNews) February 10, 2026

Regulatory and Integrity Concerns

While stablecoins offer significant benefits, they also introduce notable risks. Because stablecoins are typically issued by private entities rather than central banks, concerns around reserve backing, liquidity, and redemption rights are unavoidable. Without strong regulation, stablecoins may be vulnerable to runs, loss of confidence, or inaccurate reserve disclosures, potentially amplifying market volatility.

Financial integrity is another major concern. Stablecoins could be misused for money laundering, terrorism financing, or unmonitored cross-border capital flows that bypass existing regulatory safeguards. Regulators worry that poorly supervised stablecoins, particularly in lightly regulated jurisdictions, could weaken anti-money laundering (AML) and counter-financing of terrorism (CFT) frameworks.

A related risk is currency substitution, where individuals in countries with high inflation or weak monetary systems may prefer stablecoins, often dollar-linked, over local currencies. This could undermine domestic monetary policy and financial stability.

Monetary Sovereignty Concerns

One of the IMF’s key concerns is the impact of stablecoins on monetary sovereignty. Widely adopted stablecoins could function as de facto money in countries with fragile financial systems, reducing demand for local currencies and limiting the ability of central banks to manage inflation and liquidity.

In response, central banks and policymakers are reassessing traditional monetary tools and exploring hybrid solutions such as Central Bank Digital Currencies (CBDCs). CBDCs aim to combine the stability of sovereign money with the efficiency of distributed ledger technology (DLT).

Several countries are developing regulatory frameworks that position stablecoins within a broader digital payments ecosystem, balancing innovation with the need to protect monetary policy autonomy.

Global Coordination

The widespread adoption of stablecoins makes effective regulation challenging at the national level. Differences in regulatory approaches can enable regulatory arbitrage, where issuers operate in jurisdictions with looser rules to avoid stricter oversight elsewhere.

Global institutions such as the IMF, the G20, and the Financial Stability Board have emphasised the need for coordinated international standards. A shared framework could address consumer protection, AML and CFT compliance, operational resilience, and financial stability, ensuring the stablecoin market develops in a secure and transparent manner.

At the same time, many jurisdictions are advancing domestic regulations. The Bank of England and European authorities are examining how stablecoins can be integrated into risk management frameworks and financial systems. The United States has approved the GENIUS Act 2025, establishing a legal framework for bank-issued stablecoins with stronger collateral requirements.

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