IMF

IMF flags stablecoin risks, reiterates need for tighter crypto regulation

The IMF says stablecoin issuance has grown to $300 billion in 2025, but increased adoption poses financial risks if left unchecked.

The International Monetary Fund (IMF) has said that stablecoins, for all the benefits and efficiency they bring to payment systems, carry huge risks that countries globally should seek to address, especially in light of rapid and increasing adoption.

The IMF is now advocating for uniformity in stablecoin regulations across jurisdictions to ensure that these assets are properly regulated and monetary policies are protected.

Driving the news

The IMF made these statements in a departmental paper titled ‘Understanding Stablecoins.’

In the paper published on December 2, the organization outlined the advantages that stablecoins bring to the global financial system.
However, it focused mostly on the risks that stablecoins — mostly digital assets pegged to fiat currencies — bring to the global financial landscape.
According to the IMF’s findings, the issuance of stablecoins has increased to $300 billion as of September 2025, representing only 7% of the larger cryptocurrency market.
Most use cases have been in trading, specifically for on-ramping and off-ramping easily to and from other crypto assets. More recently, there has been a significant uptick in their usage across borders.

The good

The IMF said that stablecoins speed up the international finance ecosystem on its path to tokenization, and their centralized nature makes them easier to regulate and integrate into the existing payments system compared to other cryptocurrencies.

Stablecoins — and tokenized assets by extension — can increase the efficiency of payments by enabling cheaper and faster transactions across borders, supporting economic growth as a result.
In addition, stablecoins can also democratize access to digital payments, especially for underserved regions, and compete with existing digital payment rails, a scenario that can drive even more innovation.

The risks

The IMF, however, opined that stablecoins pose more risks to local economies if they are left unregulated or poorly regulated.

According to the IMF, the increased use of stablecoins can lead to currency substitution, where users in highly inflated economies prefer to use these digital currencies for payments rather than their local currencies.
If this becomes more widespread, countries can lose monetary sovereignty and see their central banks weakened as a result.
The risk of this happening compared to traditional dollarization is heightened by the perpetuation of smartphones today, which makes access to stablecoins easy and near instant.

More risks

Stablecoins also tend to allow for the circumvention of capital controls by providing the means for users to move capital outside regulated rails, while the increase in the adoption of USD-pegged stablecoins can reinforce the monopoly of the dollar.

Like other cryptocurrencies, stablecoins can be used pseudonymously despite being issued by centralized entities. This makes them attractive to illicit actors who need a way to move money around without being detected.
In addition, stablecoins are not regulated uniformly. As a result, users can look for regions with more loose controls to escape governance, further highlighting the existing gaps in stablecoin regulation.

Moving forward

To mitigate these risks, the IMF called for a unified global standard in the regulation of stablecoins, coordinated oversight and the strengthening of existing monetary frameworks.
The IMF also reiterated that cryptocurrencies generally should not be granted official status as legal tender and countries should step up capital controls.
Stablecoin issuers should also be strictly regulated, with their reserve claims properly scrutinized to protect users.

Before now

The IMF’s position on stablecoins mirrors that of the South African Reserve Bank, the central bank of the jurisdiction that is the most advanced in the crypto regulatory process in Africa.