Originally published in Funds Europe October 2025
Funds Europe talks to the CFA Institute’s Olivier Fines about why stablecoins could be the oil that lubricates the wheels of the digital-assets ecosystem
At 80 years old, the CFA Institute – the professional body for chartered financial analysts – may be thought of as conservative in its approach to new technology, says Olivier Fines, head of advocacy and policy research for Emea at the organisation. However, it embraces decentralised finance and the promise of fully digital, tokenised funds.
This enthusiasm extends to stablecoins, which are a type of cryptocurrency whose value is pegged to a reference asset, which could be a fiat currency, a commodity, another cryptocurrency, or an algorithm.
For well-informed fund managers, the benefits of stablecoins are clear, says Fines. “Stablecoins should enable the frictionless movement of cash rather than the five or six transactions that are typically involved with cross-border trades, all of which carry cost and risk. In this way, stablecoins could serve as a digital version of a money market fund (MMF).
“If I’m a fund manager, I would find that very appealing.”
Accelerating usage of stablecoins.
The stablecoin market is currently estimated to be worth around $250 billion based on the value of stablecoin currently in circulation.
Usage is accelerating. Circulation is predominantly in the US and has doubled over the last 18 months. However, stablecoins still only account for less than 1% of global flows, equivalent to around $30 billion in daily transactions.
However, Fines acknowledges the new technology is untested against, for example, high-volume redemptions or a liquidity crisis. There may also be uncertainty about what happens if a fund manager needs to convert exposure back to the underlying asset.
“Are we making the system more or less stable by creating these bridges between the digital and traditional? Do stablecoins mitigate or exacerbate the risk?” asks Fines.
There is uncertainty, too, over how roles traditionally fulfilled by depositary banks or share registries are filled in the event of ownership disputes, says Fines. There needs to be audit standards that can state where underlying assets are held, who they are held by and what recourse mechanism is available.
Centrally backed digital currencies
The stablecoin market had its first major setback in 2022 when the TerraUSD stablecoin developed by Terraform Labs in 2018 collapsed. However, this was not down to the technology or the concept. It was a simple failure of governance in that the stablecoin was not sufficiently backed by the underlying asset (the cryptocurrency LUNA) and then collapsed when there was a run of redemptions.
This and the growing interest in stablecoins as an alternative to the traditional, centralised financial system sparked regulators into some sort of action; however, this too has its complexities, both technical and political.
For example, in the UK and the EU, the preference is for centrally backed digital currencies (CBDCs), which allow central banks to retain some element of control over monetary policy and movements. In the US, where the current administration has passed the Genius Act, the preference is for privately-run stablecoins.
The European Central Bank’s Christine Lagarde has previously spoken of the concern that privately-run stablecoins could lead to a “privatisation of money” that risks undermining central bankers’ capacity to conduct monetary policy.
Meanwhile, the Bank of England’s governor Andrew Bailey has called on stablecoins to be subject to more stringent regulation than cryptocurrency because stablecoins “purport to be money” and must therefore hold their nominal value.
The CFA Institute has previously stated that fiat-reserve backed (FRB) stablecoins are the only iterations in the digital assets ecosystem that are truly comparable to MMFs. In a paper issued in 2024, the authors concluded that “FRB stablecoins demonstrate remarkable similarities to MMFs and have the potential to become the MMFs of the future”.
Both instruments serve as short-term facilities for investors to park funds and the primary market infrastructures are similar, states the paper. Stablecoins may currently have less transparency and more volatility than MMFs and may deviate more from their dollar peg.
However, larger FRBs have less volatility than smaller counterparts and will be subject to more regulation as a result of the Genius Act.
It is likely that politics will play a part in the development of CBDCs and stablecoins given the existential changes they could bring about, says Fines. “For example, do we have citizens interacting directly with central banks? If so, why do we need banks? It is a potentially messy situation and regulators have to make decisions: do you have governments control digital finance or do you leave it in the hands of the private sector?” asks Fines.
Genius Act is a step forward
For his part, Fines would like the private sector to take the lead and create standards. “The market is somewhat chaotic with regulators going at different paces. I would rather the industry proposed strong standards to determine the value chain.”
Fines describes the Genius Act as a step forward but not yet a solution. “It provides a level of comfort to central banks that was not there before in that it mandates one-to-one backing for stablecoins. But it will be interesting to see how this develops and if you get enough liquidity and adoption to realise the benefits.”
He adds that the CFA Institute retains the view that regulators should remain technology-agnostic and focus on the outcomes and risk.
“Don’t adjudicate the technology choices that participants make. But if there is another liquidity crisis in the same way as Terra/Luna, that could lead to a reassessment.”
Fines says fund managers should “trust the technology but don’t rush it”, and to not be led by the fear of missing out (Fomo).
“Use sandboxes and start slowly and deploy gradually. There is no reason why you should apply fewer risk controls than you would in the traditional world. For example, ensure that money and capital is separated and automated and access is mitigated. Build a team, prepare well and proceed with confidence but also caution. This is no place for Fomo.”
Nevertheless, reflecting the CFA Institute’s progressive stance, he envisages an important role for stablecoins in the cash-management arena. He describes traditional cash management as “a pain” that involves a “costly middle office and carries risk”. Stablecoins, meanwhile, can be viewed as “the oil in the engine that makes the whole digital assets system work”. No longer, he says, would market participants have to rely on the “legacy fiat system”.
