Valuation of Stablecoins: Methodologies, Risks, and Implications for the European Fund Industry
Topics: Fund distribution
A stablecoin is a cryptocurrency designed to maintain a constant value relative to a reference asset, typically a fiat currency such as the euro or US dollar. Stablecoins serve key roles in decentralized finance (DeFi), enabling payments, lending, hedging, and liquidity management. Unlike unbacked crypto assets like Bitcoin, they incorporate mechanisms—collateralization or algorithms—to preserve parity, functioning as on‑chain stores of value and media of exchange, where “on-chain” refers to transactions and activities that are directly recorded, verified, and settled on a blockchain network.
To value any stablecoin, one must first understand its structure. Stablecoins differ in issuance models, economic design, collateralization, governance, and legal claims. Each has implications for valuation.
In Europe, the MiCA regulation provides uniform rules for stablecoins offered to the public. Under MiCA, regulated stablecoins must be fully backed by safe, liquid reserves and issued by authorized institutions. These rules are designed to protect investors, and ensure that regulated stablecoins are transparent, redeemable at face value, and regularly audited.
Currently in the EU, stablecoins could be classified in 4 categories. Fiat‑backed stablecoins maintain a 1:1 peg to fiat currencies, including non‑EMTs like USDT and MiCA‑compliant EMTs such as USDC/EURC. As of February 2026, there are 33 officially registered EMTs as per ESMA. Asset‑Referenced Tokens (ARTs) derive value from mixed asset baskets and await full authorization. Crypto‑collateralized tokens (e.g., DAI) rely on digital reserves, while Algorithmic types (e.g., UST) depend primarily on market confidence and supply control mechanisms.
“Under MiCA, regulated stablecoins must be fully backed by safe, liquid reserves and issued by authorized institutions. These rules are designed to protect investors, and ensure that regulated stablecoins are transparent, redeemable at face value, and regularly audited.”
Although designed to maintain a stable reference value, stablecoins exhibit behaviours that create valuation challenges for institutional investors in NAV determination and regulatory oversight.
Deviations between market price and economic value are well documented, with the 2025 Becker Friedman Institute study showing that USDT trades at an average 54 bps discount due to centralized arbitrage and historically less transparent reserve structure, while USDC remains near par given broader redemption access. MiCA‑regulated EMTs reduce uncertainty through full reserve backing, segregation, and audits, while non‑EMT tokens vary in reserve quality and disclosure. Liquidity fragmentation across venues, oracle and data risk, governance concentration, and redemption friction further complicate fair‑value assessment. Non‑MiCA‑compliant tokens face regulatory uncertainty and potential redemption runs when reserves are illiquid, underscoring the need for rigorous valuation frameworks.
Building on these valuation challenges, the accounting treatment of stablecoins further complicates institutional assessment. The EBA’s Draft Regulatory Technical Standards on the calculation and aggregation of crypto‑asset exposure values highlight that no dedicated international accounting standards exist. Institutions therefore rely on the current IFRS framework, under which the IFRS Interpretations Committee (2019) concluded that cryptocurrencies generally qualify as intangible assets or inventory rather than financial assets, as they are neither cash nor equity instruments.
ESMA analysis confirms that crypto‑assets excluding EMTs exhibit pronounced volatility and co‑movement with equities, while even leading stablecoins have deviated materially from par. S&P Global reports annualised volatility of 8.7 % for USDC and 5.09 % for USDT during 2021–2023. A substantial portion of MiCA‑regulated crypto‑assets will likely be measured at fair value, but fragmented trading venues, limited data, and OTC activity complicate estimation. Although the EBA initially considered extending the CRR’s prudent‑valuation framework to crypto‑assets, this was postponed pending broader adoption.
For MiCA‑authorised EMTs, regulatory safeguards—full segregation of fiat reserves, issuance solely by EU‑licensed institutions, and independent attestations—support fair‑value measurement using Level 1 or Level 2 IFRS 13 inputs.
According to the Puca–Zyla framework (CFA Institute), a robust valuation process should (1) identify the stablecoin and its technical and regulatory profile, (2) define the principal market, (3) determine a consistent exit price, and (4) evaluate applicable valuation discounts. Discounts for lack of marketability are rarely relevant for major fiat‑backed stablecoins but may apply to private‑placement tokens with transfer restrictions,that could be estimated via models such as the Ghaidarov option‑based DLOM methodology.
For non‑EMT stablecoins like offshore‑issued USDT, fair‑value estimation often requires Level 3 unobservable inputs incorporating reserve quality and redemption fundamentals.
The EU stablecoin market is set to grow under MiCA, with 25% of trading shifting to compliant euro‑tokens and issuance rising. Major banks plan new launches in 2026, though euro stablecoins still make up only 7% of the global market. As adoption deepens, consistent and transparent valuation will be crucial for confidence and oversight.
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