The European Central Bank's latest Financial Stability Report highlights the rapid growth of the global stablecoin market, now valued at $280 billion, representing 8% of the total cryptocurrency market capitalization. The ECB warns that the increasing size of stablecoins, their significant holdings in short-term U.S. Treasury securities, and their close ties to traditional finance could pose financial stability risks, including de-pegging, runs, and cross-market shocks. The report specifically cautions against cross-border regulatory arbitrage, which may lead to insufficient reserves for EU issuers. The ECB recommends enhancing global regulatory coordination and implementing the G20's stablecoin regulatory roadmap to mitigate spillover risks.