BIS chief says stablecoins not credible for payments at scale
Bank for International Settlements General Manager Pablo Hernández de Cos said stablecoins are not credible for payments at scale, arguing tokenized bank deposits are a stronger path for everyday money. His remarks, reported by Reuters on Friday, come as global regulators build stablecoin frameworks and a new BIS-linked study flags sharp issuer-rule gaps across major markets.
Key Takeaways
- BIS chief Pablo Hernández de Cos questioned whether stablecoins can function as credible payment rails at scale.
- He cited interoperability limits, AML challenges, and risks to monetary sovereignty from offshore dollar-pegged tokens.
- A new FSI study found the US and Singapore take stricter issuer rules than the EU, UK, and Hong Kong.
- De Cos acknowledged stablecoins could lower government borrowing costs but warned banks might pass higher funding costs to borrowers.
- Tokenized bank deposits, he said, better preserve monetary-system foundations while harnessing tokenization.
Why does the BIS doubt stablecoins as everyday money?
The Bank for International Settlements is renewing its criticism of stablecoins as governments worldwide draft regulatory frameworks around the tokens. De Cos, who is a candidate to succeed European Central Bank President Christine Lagarde next year, told Reuters that stablecoins do not credibly function as a means of payment at scale.
He highlighted limited interoperability between stablecoin platforms and difficulties consistently applying anti-money laundering controls. Growing use of US dollar-pegged stablecoins outside the United States could also undermine monetary sovereignty and weaken domestic monetary policy, he added.
Instead, de Cos argued that tokenized deposits offer a more direct path to harness tokenization while preserving the monetary system's foundations. For broader Fintech & Crypto Alerts coverage, follow our latest regulatory and market updates.
What did the FSI study find about stablecoin rules?
A Financial Stability Institute study published Thursday compared stablecoin regulations in the United States, European Union, United Kingdom, Hong Kong, and Singapore. The BIS-linked researchers found substantial differences in which entities may issue stablecoins and what other business activities they can conduct.
The US and Singapore take relatively restrictive approaches toward non-bank issuers. Under the US GENIUS Act, lending, staking, proprietary trading, and custody of third-party crypto assets generally fall outside activities permitted for payment stablecoin issuers.
Hong Kong, the UK, and EU take a less restrictive approach, allowing some additional activities with separate authorization, regulatory consent, or other applicable permissions. Restrictions across all five jurisdictions apply to the issuing entity rather than the wider corporate group, meaning other group members can conduct activities the issuer itself cannot.
Could stablecoins still help governments cut borrowing costs?
De Cos acknowledged that stablecoins could lower government borrowing costs, an argument also made by US Treasury Secretary Scott Bessent. But he warned the effect could cut both ways for consumers.
If customers move bank deposits into stablecoins, banks could face higher funding costs and pass those expenses on to households and businesses through higher borrowing rates. The debate lands as crypto markets show mixed signals; US spot Bitcoin ETFs posted $201.8 million in net outflows Friday after a nine-day inflow streak, with total assets slipping back below $100 billion.
The comments from the Bank for International Settlements add weight to ongoing global policy discussions as lawmakers align stablecoin rules with traditional finance safeguards.