Definition ∞ Stablecoin systemic risk is the potential for the failure or instability of a significant stablecoin to cause widespread disruption across the broader financial system. This risk arises from the interconnectedness of stablecoins with traditional finance and other digital asset markets. Factors include inadequate reserves, operational vulnerabilities, or sudden loss of confidence.
Context ∞ Stablecoin systemic risk is a primary concern for global financial regulators, leading to the development of specific rules within frameworks like MiCA. News frequently reports on policy discussions aimed at mitigating this risk, particularly for stablecoins with substantial market capitalization. Preventing cascading failures and protecting consumers remain central objectives in addressing this potential threat.
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