Digital Asset and Payment Firms Should Learn from Bank Stress Tests: A Liquidity Run Could De-Peg a Stablecoin

Last week the Office of the Comptroller of the Currency announced stress testing scenarios for select banks to assess their resilience to severe economic downturns. The latest severely adverse scenario envisions a global recession, a 50% decline in equities, a 10% unemployment rate, and a 34% drop in home prices. These tests are designed to help assess whether banks can withstand financial shocks, protecting depositors and the broader economy. Digital asset and payment companies—including stablecoin issuers—are excluded from these regulatory exercises. Should they be?

1️⃣ Digital Assets Are Tightly Coupled to Macro Risks

Stablecoins, crypto exchanges, and digital lenders are increasingly integrated into the global financial system. A severe liquidity crunch—such as the one envisioned in the stress tests—could trigger massive stablecoin redemptions, causing depegging, market instability, and even contagion in traditional finance. During market turmoil, investors flee to safety. Would stablecoins remain “stable” in a 50% equity market drop or a sharp rise in unemployment? Would payment firms that rely on instant liquidity still function?

2️⃣ Stablecoin Issuers Need a “Severely Adverse” Scenario

Bank stress tests focus on loan losses, capital adequacy, and market risk—but stablecoins and fintechs operate under a different risk model. A liquidity run on a stablecoin could mirror a bank run if reserves aren’t sufficiently liquid under stress. Should stablecoin issuers be required to model redemption surges in a financial crisis?

3️⃣ Regulatory Gap Leaves Digital Finance Exposed

The Dodd-Frank stress tests do not account for risks stemming from crypto market contagion, even as digital assets represent a growing portion of global financial transactions. Should digital asset firms face stress testing requirements akin to banks? If stablecoins are to be enshrined in U.S. law (as recent legislative efforts suggest), should they be subject to similar capital, liquidity, and scenario testing requirements?

The Bottom Line: As digital assets increasingly mirror traditional financial functions, they must also mirror financial resilience. If regulators do not mandate stress testing, forward-thinking firms should self-impose these scenarios to ensure stability before the next crisis forces a real-world stress test.