Global watchdog warns the $300 billion stablecoin market could face bank runs even with full reserves - Cryptonews.net

A global financial watchdog has warned that the roughly $300 billion stablecoin market could still be vulnerable to runs, even when issuers hold full reserves backing their tokens. The caution centres on the structure of stablecoin liabilities rather than reserve adequacy alone: holders can typically redeem at par and at speed, which can turn a loss of confidence into a self-reinforcing wave of withdrawals.

The distinction matters because "fully reserved" is often treated as synonymous with "run-proof." The warning suggests that the composition, liquidity and legal treatment of reserves — and how quickly they can be converted to cash under stress — are what determine whether an issuer can meet redemptions in a panic. Interconnections with traditional banks and money markets could also transmit strain beyond crypto markets.

For market observers, the key markers are redemption terms, reserve disclosure and the quality of attestations. Watch whether regulators move from warnings toward concrete reserve, liquidity or disclosure standards, since those rules would shape how stablecoins are used as trading collateral and settlement assets.