The Hidden Balance-Sheet Cost of a €1.1T Stablecoin Market

S&P Global Ratings just published its latest report on EUR stablecoin adoption by European banks. The headline is eye-catching: EUR stablecoin market is projected to grow from €650 million at year-end 2025 to between €570 billion and €1.1 trillion by 2030. 

Great headline.

Yet a €1.1 trillion EUR stablecoin market cap carries a consequence that the optimistic headline largely understates: a material balance-sheet impact on banks, mechanically transmitted through LCR requirements and reflected directly in lower returns on equity.

This issue is already on regulators’ radar, even if it has received little public attention. In October 2025, the European Systemic Risk Board (ESRB) estimated that the liquidity coverage ratio (LCR) would have been 4% lower (at 154% from 158%) at the end of 2024 if €130 billion EUR stablecoin or 1% of EUR M1 supply were treated as wholesale deposits and ended up on balance sheets European banks. 

Now scale that assumption by a factor of nine. A €1.1 trillion stablecoin footprint implies a 36% LCR hit. If that were to happen, liquidity ceases to be a passive buffer and becomes a binding internal constraint. Internal liquidity transfer pricing rises sharply, and ROE pressure propagates across transaction banking, securities financing, and markets businesses.

In this Weekly Research, I will unpack:

1. The linkage between stablecoin deposits and LCR, bank's binding regulatory constraint

2. Scenario analysis of HQLA requirements as deposits exit and re-enter banks via stablecoin issuer balances

3. The resulting ROE implications at both bank and business-line level and bank's tradeoff decision threshold

   
   

Let’s dive in.

Linkage between Stablecoin Deposits and Bank's Liquidity Coverage Ratio

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