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

A global financial watchdog is warning that stablecoins—crypto tokens designed to hold a steady value, usually pegged to the dollar—could still be vulnerable to runs even when fully backed by reserves. The caution applies to a market now estimated at roughly $300 billion, a scale large enough that stress in it could spill into broader financial markets.

The core issue is confidence, not collateral. A stablecoin's peg holds only as long as holders believe they can redeem their tokens at face value. If enough holders rush to exit at once, an issuer may struggle to convert reserves into cash quickly—particularly if reserves include assets that take time to sell—creating a self-reinforcing cycle of redemptions. Full backing on paper does not automatically guarantee immediate liquidity under panic conditions.

For markets, the warning highlights why stablecoin reserves, redemption terms, and disclosure practices matter beyond crypto. Investors and policymakers will likely watch how regulators respond and whether issuers strengthen liquidity buffers and transparency. The key takeaway: in a run, what counts is not just what backs a token, but how fast that backing can actually be turned into cash.