Stablecoin Risks to Switzerland Remain Limited, but Cross-Border Nature Creates Lingering Concerns

In Switzerland, risks to financial stability from stablecoins are currently limited due to low volumes and low adoption. However, without sufficient international regulatory coordination, stablecoins may still constitute a source of risk to financial stability in Switzerland due to their cross-border nature and regulatory arbitrage, according to the Swiss central bank.

In its 2026 Financial Stability Report, released earlier this month, the Swiss National Bank (SNB) presents its assessment of the Swiss banking sector’s stability, highlighting the stresses and vulnerabilities that could pose a threat to financial stability. This year’s report draws a special attention to the risks emanating from non‑bank financial intermediaries (NBFIs), financial market infrastructures (FMIs), and stablecoins.

The report notes that Switzerland faces relatively minor financial stability risks from stablecoins because their volumes remain limited and there is low exposure to, and relevance of, foreign-denominated stablecoins.

As of July 2026, CHF stablecoins had a total market capitalization of less than US$50 million (CHF 40 million), which is very low compared to the CHF 901 billion in sight deposits held at banks in Switzerland during H1 2025.

However, this landscape might change if stablecoins were to significantly simplify global access to the Swiss franc and, supported by upcoming regulations, develop into a form of money accepted by the broader public.

Against this backdrop, the SNB says that preventing regulatory arbitrage across jurisdictions and financial institutions is important. Given stablecoins’ inherently global and cross-border nature, sufficient international regulatory coordination is essential.

Otherwise, the SNB warns that regulatory arbitrage could jeopardize Swiss regulation and constitute a source of risk to financial stability.

At the regulatory level, the report advocates a level playing field. Stablecoin issuers and traditional banks should face comparable requirements when conducting similar activities with similar risks, the central bank says, and no exceptions should exist based on whether an entity is a crypto startup or a traditional bank.

That said, the report notes that stablecoin issuers often operate with simpler business models than financial institutions, which justifies simplified regulation for these entities. However, this simplified regulation only works if these companies can’t exploit loopholes to avoid stricter rules.

Risks associated with stablecoins

Stablecoins are privately issued digital assets whose value is typically pegged to an official currency such as the US dollar or the Swiss franc. These digital assets are intended to be used as money, and in this respect, are similar to bank deposits.

According to the SNB, significant stablecoin volumes introduce risks to financial stability. These stem from stablecoins’ promise of at‑par convertibility, which requires them to have reserve assets. Issuers might choose to back stablecoins with highly secure and liquid assets to reduce their vulnerability to runs, an approach which carries both benefits and downsides.

These safe and liquid assets often offer lower yields. According to the SNB, this could substantially erode the profitability of stablecoin issuers, particularly in an environment with low interest rates. Narrow margins leave little room for building buffers and absorbing losses, thus creating another source of systemic vulnerability.

Furthermore, the SNB notes that if a stablecoin becomes too successful and safe, people might flee regular banks during a crisis and pivot into stablecoins instead. This would exacerbate bank failures.

Another concern is that both banks and stablecoins can hold similar assets. This means that if there is a stablecoin run, those assets would get sold off quickly, crashing their prices. Other holders of those same assets, including banks, would then suffer losses, potentially causing more runs.

There is also the solvency risk, which materializes when a liability event at one institution impairs the balance sheet of another. For example, Circle’s USD stablecoin (USDC) suffered a major de-peg event in 2023 when the value of the stablecoin fell significantly below par because US$3.3 billion, or 8% of its US$40 billion of USDC reserves was held at collapsed lender Silicon Valley Bank.

Finally, liquidity risk materializes when a stablecoin issuer rapidly withdraws large deposit volumes from its banking counterparties. Therefore, significant holdings of bank deposits by stablecoin issuers pose a concentration risk for both stablecoins and banks. This requires strict regulation that prevents this channel from amplifying stress across the system.

Stablecoin regulation in the works

To address some of these risks all the while encouraging innovation, the SNB notes that regulation is underway, with important details being finalized, including the requirements for the composition and quality of reserve assets for stablecoins, for their liquidity management, and for their equity capital.

The Federal Council is currently working on new licensing categories tailored to the crypto sector. The proposed amendment to the Financial Institutional Act (FinIA), unveiled in October 2025, introduces the payment instrument institution licence for issuers of fiat-backed stablecoins. This license replaces the existing fintech licence with specific adjustments, and removes the CHF 100 million deposit cap to allow these institutions to grow and scale.

The crypto-institution license targets companies providing services such as custody, trading, brokerage, and certain staking activities involving crypto-assets, but which do not offer services with financial instruments.

Stablecoins have grown from less than US$10 billion six years ago to more than US$300 billion today. While most of these activities remain concentrated in cryptocurrency trading, their adoption in the real-world economy is steadily expanding.

According to blockchain analysis firm Chainalysis, adjusted stablecoin volume, which filters for organic economic activity like payments, remittances, and settlement, has grown 133% compound annual growth rate (CAGR) since 2023, reaching US$28 trillion in real economic activity in 2025.

These figures come as banks and other financial institutions are expanding their use of stablecoins. Earlier this month, Standard Chartered launched a regulated institutional banking service that lets its clients directly mint and redeem Circle’s USDC through its infrastructure. Weeks earlier, BNY expanded its partnership with Circle, enabling its customers to store, transfer, mint and burn USDC.

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