In this week’s top story, the European Central Bank has again warned that the surge in stablecoins’ $280B market capitalization could threaten EU banks’ retail deposits, with global repercussions for financial market stability.
Next, in the US, the Inland Revenue Service now requires brokers to report crypto transactions via Form 1099-DA, closing tax loopholes and mandating detailed cost basis documentation by 2026.
Meanwhile, China’s bitcoin mining activities have rebounded to a 14% of the global share, despite the 2021 ban, driven by cheap provincial electricity and tacit government acceptance of the potential economic benefits.
To learn more, read on.
ECB cautions that rapid stablecoin adoption could compromise EU banks and cause risks to financial stability worldwide
The European Central Bank (ECB) published its report on the rise of stablecoins in the EU and its potential risks to both regional and global economic stability on Monday, November 2025. It warned that rapid growth in stablecoin investment could reduce prized retail depositsat banks in the EU economic region and further afield, weakening their funding stability and increasing the volatility of their funding resources.
The market capitalization of stablecoins worldwide has surged to over $280B on the crest of a wave of greater regulatory clarity and investor interest, accounting for approximately 8% of the global cryptocurrency market.
Of that 8%, USDT, issued by Tether, and USDC, issued by Circle Internet, dominate USD-backed tokens. The ECB report cautioned that a spike in redemptions of these stablecoins could spark a “fire sale” of their reserve assets, potentially disrupting US Treasury markets and leading to worldwide financial instability.
The ECB warning echoed the concerns of one of its prominent board members, Dutch National Bank Governor, Olaf Sleijpen, who cautioned that “if stablecoins are not that stable, you could end up in a situation where the underlying assets need to be sold quickly.”
The US Reserve Bank’s Stephen Miran, however, had earlier appeared to contradict this position, describing stablecoins as “an established and fast-growing part of the financial landscape.”
Meanwhile, the Chief Policy Officer of Coinbase, one of the industry’s most prominent crypto exchanges, suggested that the fiat-backed stablecoin market is more secure than traditional banking, and increased adoption will improve financial stability.
Why this matters:
While controversy exists about the impact of stablecoin adoption on the EU and the stability of the world’s economic framework, the appetite for fiat-backed crypto among investors is accelerating. Stablecoin issuers and compliance teams at participating exchanges worldwide will face increasingly stringent regulatory requirements, which vary by jurisdiction, in an ever-more competitive ecosystem. They should seek expert advice to stay ahead of the curve as they develop their business strategies.
Read more on CoinDesk.
US Internal Revenue Service’s clampdown on widely used crypto tax rebate loophole set to start in 2025
The US tax collection authority, the Internal Revenue Service (IRS) has introduced new reporting requirements that make avoiding cryptocurrency tax obligations significantly riskier starting with the 2025 tax year.
Cryptocurrency brokerages must now submitso-called 1099-DA forms that report gross proceeds from digital asset sales, ending a loophole that allowed many investors to underreport or ignore their crypto tax obligations without detection.
For transactions occurring after January 1, 2025, brokers are expected to report gross proceeds on the so-called Form 1099-DA to the IRS, with cost basis information required to be reported beginning in 2026.
In previous tax years, brokers had no obligation to issue 1099 forms for crypto transactions, making tax evasion relatively easy. Financial advisors note that many investors mistakenly believed they had no reporting obligation. Still, the IRS has always treated cryptocurrency as property, like stocks or real estate, subject to capital gains tax.
Crypto investors who transfer tokens between platforms without maintaining detailed purchase records will face challenges if the IRS probes them, as brokers only know the transfer prices, rather than the original acquisition costs. Tax professionals recommend establishing proper cost basis documentation before the end of the year and consulting qualified advisors to resolve complex situations. The IRS continues studying various transaction types, including staking rewards, with comprehensive guidance expected next year.
Why this matters:
The IRS ruling highlights the importance globally for tax authorities to define cryptocurrency trading for tax purposes accurately. Rapid and accelerating crypto uptake and adoption, both in the US and worldwide, will come with increasing requirements to educate not only the governmentsthatcreate policies and the officials who implement them, but also consumers and investors on every scale, as well as their tax advisors, on revenue collection, fairness, and sustainability.
Read more on CNBC.
China’s bitcoin mining activity surges to 14% of the world’s share despite a four-year-long total crypto trading ban
With cheap electricity and a data centre boom in some provinces, bitcoin mining is staging a comeback in China, reaching 14% (one-third) of the global market share.
When Beijing banned all crypto trading and mining in 2021, citing threats to China’s financial and energy resource stability, the country had been the world’s biggest Bitcoin mining centre. As the effects of the ban resonated, its market share slumped to zero.
However, according to data from the Bitcoin mining tracker, Hashrate Index, this trend reversed rapidly by October 2025, as entrepreneurs in energy-rich provinces turned to crypto mining to capitalize on the surplus. For example, a private miner in Xinjiang Province, named Wang (not his full name), said he started mining last year due to the abundance of cheap energy in the province. He explained thatnot much energy can be transmitted between provinces, and “people mine wherever electricity is cheap.”
Hashrate’s analysis of China’s resurgence in bitcoin mining is corroborated by crypto mining rig maker Canaan,Inc.’s rapidly rebounding sales in China. The company’s revenues from the main land increased by 2.8% in 2022, following the ban’s aftermath, and then jumped to 30.3% in its 2024 results.
Meanwhile, China’s state planning body, the National Development and Reform Commission (NDRC), which issued the 2021 ban, has remained quiet about the return of Bitcoin mining.
Why this matters:
The NDRC’ssilence on China’s bitcoin mining resurgence, despite the ban still being in place, could be interpreted as a tacit acknowledgement of the potential future economic benefits to the country. Parallel to this development, Beijing has expressed interest in implementing the use of fiat-backed stablecoins. The global cryptocurrency industry will closely monitor the progress of crypto adoption in one of the world’s largest economies.
Read more on Reuters.
