The Bank for International Settlements is escalating its assault on stablecoins, with the central bank umbrella organisation arguing they cannot function as credible everyday payments at meaningful scale. The critique arrives as governments worldwide race to nail down regulatory frameworks for the token-based assets.
According to reporting by Reuters, BIS General Manager Pablo Hernández de Cos — a contender to lead the European Central Bank next year — pushed back hard against stablecoin evangelism, positioning tokenized bank deposits as the superior alternative for a digitized financial system. The argument cuts to the heart of an ongoing ideological split between crypto advocates and traditional finance gatekeepers over how digital money should be structured.
“Tokenised deposits offer a more direct path to harness tokenisation while preserving the monetary system’s foundations,” Hernández de Cos said, signalling the BIS view that banks—not decentralized networks or private firms—should control the issuance of digital money pegged to fiat currency.
Stablecoins Present Trade-Offs for Savers and Borrowers
The BIS chief acknowledged one point where stablecoins hold appeal: they could theoretically lower government borrowing costs, a claim echoed by US Treasury Secretary Scott Bessent. But Hernández de Cos warned of an uncomfortable arithmetic for households and small businesses.
If depositors shift money out of traditional bank accounts into stablecoins, banks lose funding and face rising capital costs. Those costs get passed downstream as higher interest rates on mortgages, business loans, and credit lines. The benefit to government treasuries becomes a penalty for ordinary borrowers.
The stablecoin industry also struggles with practical problems that regulators care about. Interoperability between competing platforms remains limited. Anti-money laundering controls are inconsistently applied. And the proliferation of dollar-pegged stablecoins outside US jurisdiction threatens monetary sovereignty—allowing foreign entities to accumulate claims on US currency without traditional banking oversight.
Regulatory Fragmentation Emerges Across Five Major Jurisdictions
A new study from the BIS-affiliated Financial Stability Institute published this week underscores how fractured the global stablecoin rulebook has become. Researchers compared regulatory approaches in the United States, European Union, United Kingdom, Hong Kong, and Singapore, uncovering substantial gaps in how these markets define who can issue stablecoins and what ancillary businesses they can operate.
The US and Singapore enforce stricter rules on non-bank issuers. Under the US GENIUS Act framework, payment stablecoin issuers are barred from lending, staking, proprietary trading, and holding third-party crypto assets. Hong Kong, the UK, and the EU permit some of these activities if issuers obtain separate authorisation or regulatory approval.
A structural loophole runs through all five jurisdictions: regulations target the stablecoin-issuing entity itself rather than the entire corporate group. Other subsidiaries within the same parent company can legally conduct activities forbidden to the stablecoin issuer, creating potential arbitrage opportunities for regulated financial groups entering the space.
As stablecoin adoption continues to expand in developing markets and cross-border payment corridors, the patchwork of rules suggests investors and users will face a complex compliance environment for years to come. For traditional banks eyeing tokenization, the regulatory variance across borders remains a key variable in calculating the economics of stablecoin platforms.