Tether, Circle pen deals to advance stablecoin push as FSB, ECB throttle charge

While private stablecoin issuers like Tether and Circle are aggressively expanding the usage of their stablecoins, traditional financial institutions are focused on the risks of these fiat-pegged assets to the systems they operate. 

The Financial Stability Board (FSB) and the European Central Bank (ECB) are currently warning about the volatility of the crypto market and stressing the necessity of central bank control of the new financial instruments being introduced into the mix.

Do private stablecoins need central bank backing?

Tether, the issuer of the world’s largest stablecoin (USDT), recently announced that a Big Four accounting firm will conduct its first-ever full independent financial statement audit. 

Tether has stated that the audit will cover its complex portfolio of digital assets, traditional reserves, and tokenized liabilities. The company’s market capitalization currently exceeds $184 billion, and it has a user base of over 550 million. 

Tether’s CFO Simon McWilliams, who joined the company in early 2025 specifically to drive the audit process forward, confirmed that the Big Four firm in charge of the audit was chosen through a competitive process because the organization is already operating at Big Four audit standards. 

Tether has been reorganizing its reserve composition and moving listed securities to proprietary holding companies to ensure capital is available to support USDT stability.

Circle, on the other hand, has partnered with Sasai Fintech, a business under Cassava Technologies, to integrate USDC into Africa’s digital economy. The goal is to provide a “digital dollar” for a mobile-first generation, reducing the cost and friction of cross-border trade. 

Jeremy Allaire, the CEO of Circle, said that Africa represents a significant opportunity for on-chain infrastructure to deliver “always-on” global connectivity.

FSB warns of crypto market volatility

The Financial Stability Board (FSB) published its 2025 Annual Report today, and it focused heavily on Nonbank Financial Intermediation (NBFI). The organization has launched a Nonbank Data Task Force to track vulnerabilities in the industry.  

The FSB has urged all countries to make use of the 2023 global rules for cryptocurrencies due to concerns that inconsistencies in regulating stablecoins could lead to global financial instability.

The report also stated that the next phase of the FSB’s strategic review will focus on why the implementation of the G20 reform has slowed, and on ways to push it forward more effectively.

The European Central Bank (ECB) recently revealed its plans for the Appia and Pontes initiatives. The ECB argues that private stablecoins, even those backed by traditional currencies, are unreliable because, in times of market stress, they rarely trade at a perfect 1:1 rate.

Pontes is a bridge scheduled to launch in Q3 of 2026. It will connect existing market DLT platforms with the Eurosystem’s TARGET Services, allowing buyers of tokenized assets to settle using central bank money instead of private stablecoins.

Appia is set to be fully realized by 2028. It consists of six building blocks, including technical standards and legal frameworks.

The ECB’s goal is to ensure that tokenized central bank money, a form of CBDC for wholesale use, makes private assets easy to convert. 

The ECB believes that private assets like tokenized deposits or stablecoins can only scale safely if they are “anchored” to a public central bank asset. The ECB also warned that a “single dominant platform and stablecoin” could threaten Europe’s monetary sovereignty.

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