BIS doubts stablecoins as money, warns of stricter rules in US and Asia

BIS signals preference for tokenized deposits

Pablo Hernández de Cos, general manager of BIS, stated that stablecoins do not provide a credible payment solution within the current financial system. Instead, he maintains that tokenized bank deposits are better suited to connect blockchain technology with conventional banking infrastructure. “Tokenized deposits will make it easier to use the benefits of tokenization and keep the basics of the monetary system intact,” de Cos added.

His remarks coincide with ongoing efforts by policymakers in leading economies to design and implement regulatory frameworks around stablecoins. A recent research report from the Financial Stability Institute (FSI), an entity affiliated with BIS, provides further details on these initiatives.

Stablecoin growth faces hurdles

De Cos acknowledged that stablecoins present some advantages, such as potentially reducing government borrowing costs. Scott Bessent, US Treasury Secretary, reportedly echoed this perspective. Analysts estimate stablecoins could expand into a $3.7 trillion market by 2030, a prospect that could be accelerated following passage of the GENIUS Act. Proponents argue a maturing stablecoin market could boost private sector purchases of US Treasuries.

Despite rapid industry growth projections, de Cos warned that widespread adoption of stablecoins could drive up consumer borrowing expenses if deposits shift from banks to digital coins, leading to increased funding costs for traditional banks.

He stated that if consumers transfer significant savings into stablecoins, banks could lose a key source of funding, resulting in higher costs for both businesses and households.

De Cos also pointed out the lack of connectivity among stablecoin platforms and the challenges governments face with anti-money laundering oversight. Another concern involves stablecoins pegged to the US dollar gaining popularity internationally, which may undermine the monetary independence of countries outside the US.

Divergent regulatory approaches worldwide

The FSI report, published Thursday, compared stablecoin regulatory frameworks in the United States, European Union, United Kingdom, Hong Kong, and Singapore. The study found significant differences in rules affecting both the issuance of stablecoins and the permissible business activities of related firms.

The US and Singapore maintain relatively strict regulations for non-bank stablecoin issuers. In the United States, under the GENIUS Act, such issuers are prohibited from activities including lending, staking, proprietary trading, and holding cryptoassets for others.

Conversely, regulatory regimes in Hong Kong, the UK, and the EU are more flexible. Companies in these jurisdictions may engage in additional activities, provided they obtain approval from the relevant authorities.

The FSI also observed that restrictions typically apply only to the entity issuing the stablecoin, not the broader corporate group. This allows affiliates within the same corporate structure to conduct activities off-limits to the regulated stablecoin subsidiary.

These findings reflect intensifying regulatory focus on stablecoin issuers as governments seek to balance technological innovation with financial stability and consumer protection.