BIS issues a major bearish assessment of stablecoins: They are unlikely to become large-scale payment tools, while tokenized deposits hold greater advantages.

Bank for International Settlements (BIS) General Manager Pablo Hernández de Cos stated that stablecoins currently lack credibility as a large-scale payment tool, whereas tokenized bank deposits are more likely to leverage blockchain technology while upholding the foundations of the existing monetary system. Hernández de Cos noted that while stablecoins could reduce government financing costs, a mass shift of bank deposits into stablecoins might drive up banks’ funding costs, which would ultimately be passed on to households and businesses via higher lending rates. Additionally, limited interoperability between stablecoins, inconsistent enforcement of anti-money laundering (AML) rules, and the growing adoption of dollar-denominated stablecoins outside the U.S. could pose risks to financial stability and monetary sovereignty. A recent study from the BIS’ Financial Stability Institute (FSI) also revealed significant discrepancies in how the U.S., EU, UK, Hong Kong, and Singapore regulate stablecoin issuers. Specifically, the U.S. and Singapore impose relatively strict restrictions on non-bank issuers. The U.S. GENIUS Act, in principle, restricts payment stablecoin issuers from engaging in activities such as lending, staking, proprietary trading, and third-party crypto asset custody; Hong Kong, the UK, and the EU allow some of these activities if issuers obtain additional authorization or regulatory approval.