The head of the Bank for International Settlements (BIS), Pablo Hernández de Cos, presented a harsh assessment of the prospects for stablecoins in the context of the global financial architecture during the Fed symposium in Jackson Hole. According to him, "stablecoins" face fundamental limitations that prevent them from becoming a reliable means of payment on an economy-wide scale.
Key barriers for stablecoins
In his speech, de Cos highlighted several systemic issues, including market fragmentation, insufficient interoperability between different blockchain platforms, difficulties in complying with anti-money laundering (AML) requirements, and direct risks to the monetary sovereignty of states. He emphasized that stablecoins may be useful for highly specialized tasks, but their use as a basis for everyday transactions on a global scale looks unconvincing.
As an alternative, the BIS proposes tokenized bank deposits. According to the regulator, this instrument maintains an inseparable connection with the traditional banking system and allows for a more organic integration of blockchain technologies into the existing financial infrastructure. However, de Cos acknowledged that tokenized deposits also still have unresolved issues related to interoperability, regulation, and corporate governance.
Tightening oversight of issuers
The position of the BIS head coincided with the release of a new study by the Financial Stability Institute (FSI), the organization's analytical division. In the report, regulators analyzed stablecoin issuance rules across various jurisdictions and identified significant discrepancies in approaches. The authors propose considering issuance, redemption, and reserve management as the basic functionality of an issuer, while additional operations—lending, staking, or custodial services—could significantly alter the risk profile and require additional protective mechanisms.
Particular concern is raised by the situation with non-bank issuers. While consolidated supervisory restrictions apply to banks, major players from other segments can circumvent them through separate legal entities. In this regard, the BIS insists on expanding oversight—from the level of a specific issuer to the entire corporate group.
Conflict of two approaches
De Cos's statement came against the backdrop of rapid growth in the stablecoin market and a more favorable position of U.S. authorities, who see them as a tool for strengthening the dollar and an additional source of demand for U.S. government bonds. However, the BIS holds a different view, proposing to separate cryptoassets intended for specialized scenarios from mass payment infrastructure. This means that stablecoins will retain their role in DeFi, cross-border settlements, and crypto trading, but their impact on the traditional payment system will remain limited.
It is worth noting that the BIS has previously pointed out risks associated with mass redemptions of stablecoins: issuers hold significant portfolios of short-term government bonds, and a sharp outflow of funds could put pressure on money markets. The organization's June annual report also emphasized that current "stablecoins" do not provide the key properties of money and contribute to the fragmentation of the financial system.
My comment: The BIS position looks balanced but somewhat conservative. The stablecoin market has already proven its viability in niche scenarios, but the attempt to completely exclude them from mass payment infrastructure in favor of tokenized deposits could slow down innovation. The question is not which instrument will win, but whether regulators can create conditions for their coexistence and complementarity.