The Bank for International Settlements has sharpened its argument that today's stablecoins are not yet ready to serve as the foundation of a large-scale payment system.
In an August 28 speech at the Jackson Hole Economic Symposium, BIS General Manager Pablo Hernández de Cos compared stablecoins with tokenized bank deposits and argued that current stablecoin structures still fall short on several properties that make money reliable at scale.
The speech is not a ban, enforcement action or new binding rule.
It matters because the BIS helps shape the policy debate among central banks and financial regulators, and the issues it highlights — redemption, interoperability, liquidity under stress and financial integrity — are increasingly central to stablecoin regulation around the world.
What is the BIS concerned about?
The BIS starts from a different question than most crypto-market discussions.
Instead of asking whether a stablecoin holds its peg most of the time, it asks whether the instrument can function as money without users needing to evaluate its quality at every transaction.
That requires several properties.
Singleness
Different forms of money denominated in the same currency should exchange at par.
A dollar in one regulated bank account can generally be transferred into another bank account without the recipient negotiating an exchange rate.
Stablecoins do not always have that property.
USDT and USDC, for example, can trade at slightly different prices in secondary markets, and converting between stablecoins may require a market trade.
Under stress, those deviations can become larger.
Interoperability
A payment instrument needs to move reliably across the systems where people use it.
Stablecoins are fragmented across multiple blockchains.
A token called USDC on one chain is not automatically the same technical asset as USDC on another chain, and moving value across networks often depends on bridges, centralized issuers or interoperability systems.
Each extra layer creates operational and security risk.
Integrity and accountability
Large-scale payment systems need robust anti-money-laundering controls, legal responsibility and predictable settlement.
Permissionless blockchain environments can make those controls more complex, particularly when value moves through unhosted wallets, bridges and protocols spanning several jurisdictions.
Why does the BIS prefer tokenized deposits?
Tokenized deposits are digital representations of commercial-bank deposit claims on programmable infrastructure.
The BIS argues that they preserve more of the existing monetary architecture.
They remain liabilities of supervised banks and can settle through the banking system anchored by central-bank money.
That gives policymakers a clearer route to par convertibility, liquidity support, prudential supervision, identity and AML controls, and settlement finality.
Stablecoins, by contrast, are typically issued against a fixed pool of reserve assets and do not automatically have access to central-bank liquidity when redemption demand surges.
What is the liquidity problem?
A stablecoin issuer generally creates new tokens when users provide cash or other eligible assets.
That structure can work in normal conditions.
Under stress, large redemptions may require the issuer to sell reserve assets quickly.
If those reserves are not immediately liquid, fire-sale dynamics can emerge.
The BIS therefore asks a difficult design question:
Can stablecoins guarantee redemption at par in every market condition without relying on public liquidity backstops?
If the answer requires direct central-bank access, regulators then need to decide whether a private stablecoin issuer should receive privileges similar to a bank.
That moves the debate from crypto product design into banking policy.
Why interoperability is more than a technical inconvenience
The stablecoin market operates across Ethereum, Tron, Solana, Base, BNB Chain and many other networks.
That expands distribution but fragments settlement.
A user can own the same branded stablecoin on different chains while facing different bridge risks, transaction finality, smart-contract risk, compliance controls and liquidity pools.
A large-scale payment system built on fragmented rails must somehow preserve the idea that one dollar remains one dollar everywhere.
The BIS does not believe current structures fully solve that problem.
Does the BIS want stablecoins banned?
No.
The August speech explicitly considers a future system in which stablecoins and tokenized deposits can coexist.
The argument is that stablecoins need stronger answers to the monetary and regulatory problems before they can credibly function as a mainstream means of payment at scale.
Stablecoins may still have specialized roles and are already heavily used for crypto trading, cross-border value transfer, access to dollar-like assets, blockchain settlement and DeFi collateral.
The BIS concern is the leap from those uses to becoming core everyday money.
What does this mean for stablecoin issuers?
The policy direction points toward higher expectations around:
- reserve quality;
- redemption rights;
- segregation of customer assets;
- operational resilience;
- cross-chain controls;
- AML compliance;
- governance;
- issuer licensing;
- liquidity management.
Issuers that want to participate in mainstream payments will increasingly be judged less like crypto-token projects and more like financial institutions.
What does it mean for exchanges?
Stablecoins are a core settlement asset for crypto exchanges.
A more restrictive regulatory framework can affect exchanges even if they do not issue their own stablecoin.
Potential impacts include which stablecoins can be listed, whether yield can be offered, reserve-disclosure requirements, geographic restrictions, redemption access, treatment of offshore issuers and cross-chain deposit and withdrawal support.
For exchange-risk analysis, the key question is no longer simply "Is the stablecoin worth $1 today?"
It is also:
What legal claim does the holder have, against which issuer, backed by what reserves, in which jurisdiction, with what redemption path?
A second BIS paper adds a regulatory-design warning
The August 28 speech follows a BIS Financial Stability Institute brief published a day earlier examining which entities should be allowed to issue stablecoins and what additional activities those issuers should be permitted to conduct.
The policy concern is that an issuer that also engages in lending, staking or custody can accumulate risks beyond simple issuance and reserve management.
That creates a recurring regulatory principle:
the wider the issuer's business model, the stronger the safeguards needed around the stablecoin itself.
CEXVia assessment
Risk level: Medium — Regulatory / Structural
The BIS speech does not create an immediate operational risk for a specific stablecoin.
Its importance is directional.
Central-bank policy thinking is increasingly separating "tokenization" from "stablecoins." Policymakers may support programmable finance while still preferring tokenized bank money over privately issued stablecoins for large-scale payments.
For stablecoin issuers, the regulatory challenge is therefore not just proving reserves. It is demonstrating that redemption, interoperability, liquidity and financial-integrity controls can work under stress and at much larger scale.
What to watch next
- national rules implementing stablecoin reserve and redemption requirements;
- central-bank treatment of tokenized deposits;
- whether stablecoin issuers gain or are denied access to central-bank infrastructure;
- restrictions on issuer lending, staking or custody activities;
- cross-chain stablecoin regulation;
- differences between U.S., UK, EU and Asian frameworks.
FAQ
Did the BIS say stablecoins are illegal?
No. The BIS is discussing structural and regulatory risks, not declaring stablecoins illegal.
What is the BIS's main concern?
The BIS argues that current stablecoins do not yet fully provide the singleness, interoperability, liquidity resilience and financial integrity expected of money at scale.
What are tokenized deposits?
They are commercial-bank deposit claims represented on programmable or tokenized infrastructure while remaining liabilities of regulated banks.
Does the BIS prefer tokenized deposits to stablecoins?
For mainstream payments, the BIS currently argues that tokenized deposits provide a stronger foundation because they remain connected to the regulated two-tier banking system.
Will this affect USDT and USDC immediately?
The speech does not change their legal status by itself. Its relevance is to the direction of future regulatory and payment-system policy.
*This article is for informational purposes only and does not constitute financial, legal or investment advice.*