(AGENPARL) – Thu 18 September 2025 Stablecoins in the Payments Ecosystem:
Reflections on Responsible Innovation
Welcome address by Chiara Scotti*
Deputy Governor – Banca d’Italia
Economics of Payments XIV Conference
Rome, 18 September 2025
Ladies and gentlemen, distinguished guests and colleagues,
Welcome to the XIV edition of the ‘Economics of Payments Conference’.1 It is a pleasure
to host this prestigious gathering of policymakers, regulators, academics, and private
sector professionals who are at the forefront of the evolution in payments. Banca d’Italia,
in collaboration with the Committee on Payments and Market Infrastructures (CPMI),
is pleased to welcome you for two days of rigorous dialogue, data-driven insights,
and collaborative vision-setting. In a period marked by both profound uncertainty and
unparalleled opportunities spurred by technological innovation, such dialogue is more
essential than ever.
This year, we are especially delighted to welcome Professor Fernando Alvarez, from the
University of Chicago, and Miguel Díaz, Head of Strategy at the BIS Innovation Hub, as
keynote speakers. The program features 27 papers across 7 themed sessions, showcasing
perspectives from central banks, international institutions, academia, and fintech.
Sessions span topics from the macroeconomics of digital currencies, payments, and
payment choices to the granular realities of payment instrument adoption, cross-border
payments and remittances, interoperability, and financial stability. Additional poster
sessions will allow for deep dives into new data and methods for the study of retail
payments and into the nuts and bolts of payment infrastructures.
With its rich menu, the conference offers not only food for thought but hopefully some
viable considerations for guiding practice and policy. The variety of topics in fact confirms
the vivacity of payments in the current environment, which makes an integrated view
comprising technical, academic, and policy perspectives crucial to support innovation
that is secure, efficient, inclusive, and resilient.
I thank Luca Arciero, Nicola Branzoli, Michele Lanotte and Stefano Pietrosanti for their assistance in
preparing this welcome address.
Banca d’Italia – Conference on the Economics of Payments.
And it is hard to speak about payments innovation without mentioning the increased role
played by the crypto-assets market and stablecoins. In the remainder of my remarks, I will
thus focus on recent developments in the stablecoin market, an area that has attracted
growing interest for its potential use cases but that continues to present relevant challenges.
On the one hand, that is, stablecoins are often presented as promising tools for lowering
transaction costs, enhancing efficiency, and enabling 24/7 availability.2 On the other hand,
they carry inherent vulnerabilities such as run risk and interconnectedness, which could
lead to financial stability concerns. Having discussed these risks in other venues,3 today
I would like to focus on two open issues: regulatory fragmentation and multi-issuance
models.
Market snapshot and recent developments
Stablecoins are digital tokens recorded on distributed ledgers (‘on-chain’) that aim to
maintain a stable value relative to a reference asset, including fiat currency such as the US
dollar or euro. In the case of fiat currency, stability is achieved by ensuring – or attempting
to ensure – convertibility at par value, on demand. Unlike unbacked crypto-assets, such as
Bitcoin or Ether, stablecoins are designed to be redeemable and anchored to external value
reserves which are often, but not always, held in (the form of) liquid and low-risk assets.4
As of last week, global crypto-asset capitalization exceeded 4 trillion US dollars.
Stablecoins now represent nearly 300 billion dollars – about 7.5 per cent of the crypto
market – marking a 75 per cent year-over-year growth.
The sector remains heavily concentrated.5 Tether’s USDT accounts for 56 per cent of
the market; followed by Circle’s USDC with 25 per cent.6 Together, these two US dollarpegged stablecoins dominate 80 per cent of the space. In total, stablecoins that aim to
maintain parity with the USD make up 98 per cent of the global market.
Currently, more than 100 fast payments systems – such as Target Instant Payments Systems (TIPS)
– exist at international level, allowing the settlement of payment on a 24/7 basis. Many jurisdictions
are exploring interlinking arrangements between their domestic FPS and those of other countries in
order to increase the efficiency of cross-border payments. See Frost, J., Wilkens, P.K., Kosse, A., Shreeti,
V. and Velasquez, C., ‘Fast payments: design and adoption’, BIS Quarterly Review, 2024.
For an in-depth analysis of this aspect, see: C. Scotti et al, ‘The Financial Stability Implications of Digital
Assets’ (2022), C. Scotti ‘Financial and Tax Regulation for the Digital Era: Charting the Path Forward’
(2025); Banca d’Italia, ‘The Governor’s Concluding Remarks’ (2025).
R. Ahmed and I. Aldasoro (2025), ‘Stablecoins and safe asset prices’, BIS Working Paper 1270.
S. Cecchetti and K. Schoenholtz (2025), ‘Crypto, tokenization, and the future of payments’, CEPR Policy
Insight No 146.
According to the latest published report, as of 30 June 2025, USDT was backed by the following
asset categories: approximately 80 per cent in cash, cash equivalents, and other short-term deposits
– including U.S. Treasuries and repurchase agreements – 5.4 per cent in precious metals, 5.5 per cent in
Bitcoin, 6.2 per cent in secured loans, and slightly less than 3 per cent in other investments. Corporate
bonds were also present but represented less than 0.01 per cent of the total reserves. As for USDC, as
of 31 July 2025, the token was primarily backed by US Treasuries and repurchase agreements, which
accounted for around 86 per cent of the reserves. The remaining 14 per cent was held as cash at
regulated financial institutions.
In stark contrast, euro-denominated stablecoins account for about 620 million dollars
in market capitalization – about 0.2 per cent of the total. The largest are EURC (Circle)
and EURS (Stasis), collectively holding 60 per cent of this subsegment.
At present, stablecoin demand is spurred by four main drivers.7 First, stablecoins
primarily serve as a transactional bridge for entering and exiting the crypto-asset
ecosystem.8 Their role is closely tied to enabling liquidity flows across trading platforms
and decentralized finance (DeFi) protocols, where they function as readily transferable
digital tokens.
Second, in emerging markets plagued by inflation, currency volatility, and high
remittance costs, stablecoins may offer an alternative to more traditional solutions to
store value and transfer funds, such as those operated by banks and money transfer
operators (MTOs).9
Third, although retail adoption is still limited, many companies are testing stablecoin
integrations for programmable B2B payments.10 Some stablecoins issuers have partnered
with major payment networks to embed stablecoin use in settlement layers.
Fourth driver is the potential for illicit activity – such as fraud, money laundering, and
sanctions evasion – which can overlap with the other use cases and remains a significant
concern. Stablecoins’ ease of use, global accessibility, and the limited traceability of certain
protocols make them particularly susceptible to misuse. Although accurately quantifying
such activity remains challenging,11 these features underscore the need for strong regulatory
oversight and effective monitoring mechanisms as their adoption grows.12
A recent analysis has attempted to quantify the primary use of the existing stablecoins
described above.13 According to this research, crypto trading activities represent the most
important use case (about 90 per cent of volume) while payments use cases (cross-border
remittances, corporate treasury and P2P) represent a small fraction (roughly 6 per cent).
Notably, although the structure of stablecoins resembles that of money market funds, their demand
does not behave as though they were safe assets. See Aldasoro et al. (2025), ‘Stablecoins, money
market funds and monetary policy’, Economics Letters, Volume 247, 112203.
The US Federal Reserve Board estimates that more than 80 per cent of trade volume on major
centralized crypto exchanges involve stablecoins. See Christopher J. Waller, ‘Reflections on a maturing
stablecoin market’, Board of Governors of the Federal Reserve System, February 12, 2025; ‘Share of
Trade Volume by Pair Denomination’, The Block, September 10, 2025.
See Auer et al. (2025), ‘DeFiying gravity? An empirical analysis of cross-border Bitcoin, Ether and
stablecoin flows’, BIS Working Paper n.1265.
A survey run by Artemis, involving a sample of 33 stablecoins-based payments companies and firms
on different type of stablecoins payments (B2B, P2P, B2C, Card etc.), B2B payments are the most
important, ($36 billion), followed by P2P ($18 billion run), card-linked payments ($13.2 billion), B2C
($3.3 billion), etc.
According to Chainalysis, stablecoins represent 63 per cent of all crypto transaction volume associated
with illicit activity in 2024 – see Chainalysis’ 2025 Crypto Crime Report.
Italy’s Financial Intelligence Unit, ‘Annual Report 2024’; Manna et al. (2025) ‘Report on crypto-assets
and the risk of money laundering’ and Chainalyis, ‘2025 Crypto Crime Trends: Illicit Volumes Portend
Record Year as On-Chain Crime Becomes Increasingly Diverse and Professionalized’, 15 January 2025.
Boston Consulting Group, ‘Stablecoins, five killer tests to gauge their potential’, 2024.
Whether stablecoins truly offer a faster and more cost-effective alternative to traditional
payment channels (e.g. banks and remittance services) remains an open question. In this
regard, it is worth noting that while various types of crypto products are used as a means
of payment, only stablecoins pegged to a single fiat currency are suitable for this function,
also because they offer a high level of customer protection through the right to redemption
at their nominal value.14
According to the World Bank, the average global cost to send a 200 USD remittance in 2024
stood at around 6.5 per cent, with significant regional variation depending on provider,
corridor and regulatory framework.15 Other sources16 estimated that using stablecoins to
send a 200 USD remittance from sub-Saharan Africa reduces costs by approximately 60 per
cent compared to traditional methods.17 And some market operators claim that stablecoins
can enable low-cost settlement, with transaction fees often below 0.01 USD on certain
Layer 2 networks.18 However, these figures typically exclude critical components of the
payment chain – such as ‘last mile’ delivery costs, on/off-ramp fees, and foreign exchange
charges. As a result, the overall efficiency of stablecoins may be overstated, particularly
when evaluated against the full end-to-end expense of cross-border payments.
Focusing on the largest stablecoins (Circle and Tether) a recent analysis run by the IMF19
confirms that Tether’s USDT is more popular in regions with the most emerging economies
– Africa and the Middle East, Asia and the Pacific, and Latin America and the Caribbean –
while Circle’s USDC is more prevalent in regions with more advanced economies, i.e. Europe
and North America.
As to the use of euro-denominated stablecoins, while data remains rather limited,
early evidence suggests that they are primarily exchanged against dollar-denominated
stablecoins. Internal analyses20 also indicate that the euro-dollar exchange rate may influence
the market capitalization of euro-denominated stablecoins: periods of euro depreciation
tend to coincide with increased demand for euro stablecoins, possibly reflecting European
investors’ search for positive returns during dollar appreciation.
See Regulation (EU) 2023/1114 (MiCAR), Titles IV, which set out requirements for stablecoins, including
redemption at par value and consumer protection measures for e-money tokens pegged to a single
fiat currency.
World Bank Remittance Prices Worldwide, March 2025.
Chainalysis (2024): The 2024 Geography of Crypto Report, October.
Although stablecoins may address the aforementioned frictions, they can pose risks, especially when
denominated in a foreign currency and operating from a foreign jurisdiction. These risks include
currency substitution and potential loss of seigniorage, as well as volatile capital flows. In addition,
currency substitution could undermine the ability of authorities to control the monetary policy. For
more information, see CPMI’s ‘Considerations for the use of stablecoin arrangements in cross-border
payments’, October 2023.
a16zcrypto, ‘State of Crypto Report 2024’.
M. Reuter, ‘Decrypting Crypto: How to Estimate International Stablecoin Flows’, IMF Working Paper,
June 2025.
Di Iorio et al (2025), ‘The euro-stablecoin market and the impact of MiCAR’, Banca d’Italia, mimeo.
Traditional institutions are responding to shifting dynamics in the stablecoin market and to
the growing use cases just described. Several banks in the US and Europe have announced
plans to issue their own stablecoins, often citing client demand for more efficient digital
payment solutions. Recent strategic alliances – involving large international banks and
crypto-exchanges – aim to bridge the gap between fiat and crypto ecosystems. Meanwhile,
some BigTech platforms are developing embedded stablecoin solutions.
Challenges and risks
As the financial system continues to evolve, stablecoins and other innovative instruments
deserve our close attention. These instruments may offer novel solutions to long-standing
issues in payments and financial intermediation, particularly in the cross-border context.
However, their growth also raises important questions about governance, stability, their
potential misuse for illicit purposes, and the consistency of oversight across jurisdictions.21
As we navigate this landscape, it is essential that we remain open to the opportunities
presented by modern technologies, while carefully evaluating their potential impact on
the broader financial system. Striking the right balance between enabling innovation and
safeguarding key policy objectives – such as financial stability, monetary sovereignty,
financial inclusion, consumer protection, and trust in money – remains a major challenge
for public authorities.
Today I would like to highlight two vulnerabilities that, in my view, are particularly
relevant, not only because of their potential systemic impact, but also because of the
specific institutional and regulatory context in which we operate.
Regulatory fragmentation
At an international level, several jurisdictions have either adopted or are finalizing
dedicated regulatory frameworks for crypto-assets.22 While the institutional approaches
may differ, they all share the same objective: to establish clear rules that enhance legal
certainty, strengthen consumer protection, and safeguard market integrity. I will focus on
a comparison between the European and American frameworks, sharing some preliminary
thoughts with you.
Both the EU’s Markets in Crypto-Assets Regulation (MiCAR) and the US Genius Act
provide a regulatory regime for stablecoins, including licensing regimes, operational
and compliance requirements, and restrictions on the composition of reserve assets for
issuers. However, the two frameworks differ in important respects, particularly when it
comes to scope, enforcement, and the degree of holders’ protection.
See, for example, Ma, Y. et al. (2025), ‘Stablecoin Runs and the Centralization of Arbitrage’, NBER
Working Paper Series n. 33882; Lyons, R.K. and G. Viswanath-Natraj (2023), ‘What keeps stablecoins
stable?’, Journal of International Money and Finance, Volume 131, 102777; Aldasoro, et al. (2025),
‘Stablecoin growth – policy challenges and approaches’, BIS Bulletin n. 108.
See Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on
markets in crypto assets, article 2.4 (Scope), and Working Group on Digital Assets (2025) ‘Strengthening
American Leadership in Digital Financial Technology’.
In terms of scope, the US framework is narrower, focusing specifically on payment
stablecoins. By contrast, MiCAR applies to a much broader category of crypto-assets
that are not already covered by existing financial regulation. In terms of enforcement,
MiCAR introduces a robust supervisory framework for crypto-asset service providers
(CASPs), requiring authorization from national competent authorities and imposing
detailed obligations regarding governance, capital, the segregation of client assets, and
the conduct of business. The Genius Act takes a lighter-touch approach and currently
leaves many service providers outside its scope.23 Regarding crisis management, MiCAR
requires stablecoin issuers to draw and maintain recovery and resolution plans, whereas
the Genius Act provides only limited tools.
Another difference concerns redemption fees. MiCAR requires that stablecoin issuers
guarantee the redemption of single-currency stablecoins at par without imposing fees,
while the US rules allow for users to be charged for payment stablecoins.24
In addition, unlike the Genius Act, MiCAR addresses issues of market abuse directly. In
this sense, the European framework adopts a broader approach to investor protection
and market integrity.
Other jurisdictions are moving in different directions. For instance, in the United Kingdom,
draft legislation published by the UK Treasury25 proposes that only stablecoins issued
from within the UK should be subject to regulatory oversight – those issued abroad
could still be traded on UK exchanges. Meanwhile, Japan, Singapore, and Hong Kong
have developed their own models. These divergences raise concerns about regulatory
fragmentation and the potential for arbitrage, which could undermine supervisory
coherence.
This brings me to the second issue I would like to discuss today.
Multi-issuance stablecoins
Multi-issuance stablecoins (MISC) are tokens issued under a single brand by multiple
entities operating in different jurisdictions. Those tokens are fully fungible, regardless of
the issuer.26 Under this scheme, EU stablecoin issuers could receive redemption requests
from third-country token holders. If sufficient reserves are unavailable in the EU to meet
these requests, the third-country entity is expected to transfer assets.
In the United States, Congress is working on the so-called Clarity Act, which will introduce definitions
and compliance requirements for the rest of the digital asset ecosystem.
Neither the Genius Act nor MiCAR allows for interest payments to stablecoin token holders. In
Europe, this provision also applies to CASPs. Without an explicit prohibition on exchanges acting
as a distribution channel for stablecoin issuers or business affiliates, this requirement can easily be
circumvented or undermined. On this point, see Banking Policy Institute (2025), ‘Closing the Payment
of Interest Loophole for Stablecoins’.
New crypto-asset rules to drive growth and protect consumers – GOV.UK
See General Secretariat of the Council of the European Union (2025), ‘Non-paper on EU and third
country stablecoin multi-issuance’.
Although this architecture could enhance global liquidity and scalability, it poses
significant legal, operational, liquidity and financial stability risks at EU level, particularly
if at least one issuer is located outside the European Union. In these cases, liquidity
risk is heightened, as each co-issuer could be held liable for the entire outstanding
token volume, even though they only hold a small fraction of the corresponding reserve
assets, simply because holders, whether resident or non-resident, view all tokens as
interchangeable. This can lead to a mismatch between obligations and available reserves,
especially if redemptions are concentrated in the EU while reserves are held abroad or on
the balance sheets of other issuers.
Further complications arise from inter-issuer agreements, such as reserve rebalancing
mechanisms, which may shift liabilities across jurisdictions in an uncoordinated manner.
In a crisis, these flows could be triggered rapidly, leaving authorities with limited oversight
and delayed reaction capacity. This structure challenges not only the prudential resilience
of the individual issuers, but also the integrity of the broader regulatory framework.
This structural fragility is exacerbated by legal and operational risks. When an EU-based
issuer holds reserves in a foreign currency (i.e. US dollars), those assets are usually
located in the country where they were issued, often outside the EU. This means the
reserves may be subject to foreign capital controls, regulatory restrictions, or settlement
delays, particularly in times of market stress. Without strong safeguards – such as
regulatory equivalence, the mutual enforceability of redemption rights, and the free
transfer of reserve assets across borders – these arrangements become more vulnerable,
opening the door to fragmented investor treatment, moral hazard, and broader systemic
vulnerabilities.
In addition, in a multi-issuance model, third-country issuers are not necessarily subject
to the same consumer protection, transparency, and disclosure requirements as those
set out in MiCAR. This asymmetry may leave European token holders with lower levels of
protection.27
To mitigate these risks and avoid regulatory blind spots, issuance should be limited to
jurisdictions that uphold equivalent regulatory standards, ensure redemption at par, and
enforce cross-jurisdiction crisis protocols. The robustness of a multi-issuer framework
hinges on strong cross-border cooperation among supervisory authorities, including
mechanisms to consistently monitor and verify the adequacy of reserves in terms of size,
quality, and location.28
Without such coordination, there is a real risk of regulatory arbitrage, whereby
activity gravitates towards the jurisdiction with the least stringent regulations, thereby
undermining financial stability and investor confidence. For this reason, clarity at the
Odinet, C. and A. Tosato (forthcoming, 2026), ‘Regulating Stablecoins: Comparing MiCAR and the
GENIUS Act’, Notre Dame Law Review Reflection.
A further element confirming this need is the fact that stablecoin holders could be prompted to
massively demand the return of their value as a result of turbulence concerning issuances linked to
less stringent jurisdictions. This could lead to systemic effects capable of undermining the payment
system and financial stability.
legislative or standard-setting level would be both timely and valuable – helping to
establish a common playing field, to prevent free-riding, and to promote a more coherent
and resilient global approach to stablecoin oversight.
In search of a path: policy reflections
Amidst growing risks and challenges, innovation is reshaping the financial ecosystem.
Stablecoins, other crypto-assets, tokenized deposits, central bank digital currencies, and
additional novel instruments are being explored as potential solutions to reduce frictions
in the payments landscape.
For this transformation to be meaningful and sustainable, these new forms of money
and services must address users’ needs, without compromising financial stability, market
integrity, and inclusion. But the pace of change, the complexity of emerging use cases,
and uneven regulation across jurisdictions require a consistent and forward-looking
policy response.
Let me share a few reflections on how we might navigate these uncharted waters.
First, international cooperation remains vital because digital technologies transcend
borders. Guidelines and recommendations by international standards bodies and the
G20’s roadmap on cross-border payments provide a solid foundation on which to develop
an effective regulatory framework. But fast-moving progress demands continuous
dialogue, adaptable frameworks, and shared accountability.
Second, innovation must be fostered responsibly, establishing clear rules and standards
that balance openness to new technologies while safeguarding financial stability,
consumer protection, and sound market functioning.
Third, data are critical. To identify risks early and to tailor effective responses, we need
common metrics and close collaboration with the scientific community and the private
sector in order to develop better tools and models.
Returning to the topic of stablecoins, we need specific safeguards for multi-issuance
stablecoins, which pose complex cross-border challenges. These arrangements require
a high degree of trust and transparency between jurisdictions. Key safeguards should
include regulatory equivalence, mutual enforceability of redemption rights, and the
absence of legal or operational barriers to asset transfer, especially during crisis periods.29
One of the key lessons (learnt) from the global financial crisis is that ring-fencing cannot
substitute coordination. In a globally interconnected system, divergence only amplifies
risks.
Supervisory frameworks also need to evolve. Activities such as staking, yield farming,
and crypto-lending often replicate traditional banking functions but without equivalent
Arnal J. (2025), ‘Multi-issuance stablecoins and MiCA’s first real credibility test’.
oversight. The principle of ‘same activity, same risk, same regulation’ must guide our
approach.
Finally, competition must be preserved. While stablecoins may comply with financial
regulations, their integration into global digital platforms could create potential market
imbalances. Ensuring a level playing field is critical for protecting consumer choice and
maintaining trust. In this regard, the European Commission’s 2024 review of the definition
of relevant markets for antitrust purposes is a timely and welcome step.
Through all of this, the role of central banks remains clear: to provide certainty in uncertain
times. We must enable innovation while preserving trust, encourage competition while
ensuring cohesion, and support progress without compromising prudence.
The path ahead may be complex but it is also full of potential. It is a path that we must
navigate together – with clarity, coordination, and commitment.
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