As global markets continue to absorb the prospect of new U.S. trade barriers, central bank officials in Europe and Asia warn that the volatility they create in bond markets could reveal another hidden risk.
Similar to the 2008 Lehman Brothers debacle, which triggered a $600 billion run on money market funds, forced the sale of commercial paper and froze global credit markets, some central bank officials believe a run on stablecoins could trigger a much larger flash selloff in U.S. Treasuries.
Although only time will tell if a contagion of this magnitude will occur again, some recent events have provided a glimpse of what it might look like.
For example, Donald Trump’s tariff threats are not aimed at crypto; However, the shockwaves they cause could inadvertently hit the digital dollar economy much harder than expected. The US president’s October 10 threat to hit China with new 100% tariffs wiped nearly $20 billion from the crypto market in less than a day.
Another relevant stress event was the March 2023 USDC deindexing following the Silicon Valley Bank bankruptcy, when uncertainty over access to reserves caused the token to plummet to $0.88. This incident remains an example of how real-world financial shocks can trigger sudden redemptions even in the largest fiat-backed stablecoins.
Incendiary sale of Treasury bills?
With most stablecoins being the latest hot trend in crypto and many of the major ones tied to the US dollar, some are warning that the risk of another global contagion could be real.
Dutch National Bank (DNB) Governor Olaf Sleijpen, one of the European Central Bank’s 26 policy-making members, told the Financial Times that a run on dollar-pegged tokens could trigger fire sales of US Treasuries and force central banks to completely rethink their monetary policy.
If tariffs push yields up and liquidity down, the typical response to trade shocks, Treasuries become less stable, precisely when they are needed most. “If stablecoins are not as stable,” Sleijpen warned, “you could find yourself in a situation where the underlying assets need to be sold quickly.”
Stephen Miran, governor of the US Federal Reserve, appeared to preemptively refute this claim, saying that stablecoins are an “innovation”. [that] has been unfairly treated as a pariah by some, but stablecoins are now an established and rapidly growing part of the financial landscape.
A recent report from DNB highlights that although “the stablecoin market is on a rocket trajectory” that “could reach $2 trillion within three years under the US GENIUS Act,” a “tremendous risk lies beneath its shiny veneer” due to its “explosive growth and concentration as Tether and Circle control 80%.”
“Rapid expansion comes with strings attached,” the report adds, highlighting the “risk of massive buyouts, such as after the collapse of Silicon Valley Bank, which could trigger sales of U.S. Treasuries, strain crypto exchanges and spill over into European financial institutions.”
Miran rejected this idea, saying that “because GENIUS Act payment stablecoins do not offer yield and are not backed by federal deposit insurance, I see little chance of funds largely fleeing the national banking system.”
Other financial institutions have raised similar concerns. The Bank for International Settlements (BIS) and the Reserve Bank of Australia (RBA) have agreed that global economic tensions are increasing the use of stablecoins overseas while eroding the value and liquidity of the assets that support them.
In a June 2025 report, the BIS said: “A loss of confidence in stablecoins could lead to large and sudden redemptions, potentially disrupting the world’s most important government bond market. »
Trump’s tariff threats are exacerbating this stress. In a globalized economy in which cross-border trade becomes more volatile, dollar-pegged tokens are also becoming more attractive and more fragile, creating pressure that could push the $310 billion stablecoin industry into global systemic relevance faster than regulators are prepared, the RBA and BIS coincided.
The RBA notes in an October report that stablecoin volume grew by more than 50% in the 12 months to June 2025 and warns of the risks this growth poses. He adds that “projections for industry growth range from $500 billion by 2028 to $4 trillion by 2035.”
The BIS said several industry forecasts place the market at between $2 and $3 trillion by 2030, a scale at which “even a moderate repayment shock could rival the episodes of Treasury market stress seen in March 2020.”
Australia’s central bank agrees with Sleijpen, saying “a sudden decline in sentiment towards stablecoins could trigger fire sales of assets that could spill over into repo and other major US funding markets.”
Safer than the bank
If such a scenario comes true and a fire sale is triggered, the GENIUS Act guarantees that the US government will have to bail out stablecoin issuers and their holders to the tune of hundreds of billions of dollars.
However, in the opinion of Coinbase Policy Director Faryar Shirzad, “full reserve support makes stablecoins safer than banks” and their “wider adoption actually strengthens stability.”
He further explained: “Banks make long-term, often risky, loans to individuals and businesses, exposing them to both credit and liquidity risks. In contrast, stablecoin issuers typically hold short-term government bonds, which are virtually risk-free and highly liquid.”
