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BIS criticizes stablecoins over scale and trust

Reiterating its criticism of the stablecoin market, the Bank for International Settlements (BIS) has reopened the debate over whether these assets can be a reliable tool for everyday payments at scale. In a statement on Friday, BIS Managing Director Pablo Hernández de Cos argued that tokenized bank deposits are the more solid option for payment infrastructure.

According to De Cos, stablecoins may have the potential to lower public borrowing costs in some areas, but wider adoption could create new costs. In particular, if users shift bank deposits into stablecoins, banks’ funding costs could rise and that burden could be passed on to households and companies through higher loan rates.

Pablo Hernández de Cos also pointed to limited interoperability between stablecoin platforms and the challenge of applying anti-money laundering rules consistently. He warned that if U.S. dollar-pegged stablecoins grow more widely outside the United States, they could put pressure on monetary sovereignty and local monetary policy.

Key risks for the banking system and markets

The BIS’s stance shows that fast-growing payment-focused tokens in the crypto market are being viewed not only as a technology issue but also through the lens of financial stability. The main risks highlighted by the institution center on the banking system’s funding structure and the limits of regulatory oversight.

  • A shift from bank deposits to stablecoins could increase banks’ funding costs.
  • That rise in costs could be passed on to consumers and businesses through loan rates.
  • Incompatibility across platforms could limit scalability in payments.
  • Consistent enforcement of anti-money laundering standards could become harder.

Rules differ across five major markets

What differences did the FSI study find?

A study published on Thursday by the Financial Stability Institute (FSI), which is linked to the BIS, compared stablecoin regulations in the United States, the European Union, the United Kingdom, Hong Kong and Singapore. The research found significant differences in which institutions can issue stablecoins and what other activities those entities are allowed to carry out.

According to the study, the U.S. and Singapore take a relatively more restrictive approach toward non-bank issuers. In the U.S., under the GENIUS Act, issuers of payment stablecoins are generally not allowed to engage in activities such as lending, staking, proprietary trading or third-party crypto asset custody.

Hong Kong, the United Kingdom and the European Union, meanwhile, offer a framework that is more open to certain additional activities through separate licensing, regulatory approval or similar permissions. The researchers also noted that in all five jurisdictions, most restrictions apply to the legal entity issuing the stablecoin rather than to the wider company group.

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