BIS Chief De Cos: Stablecoins Lack Credibility for Payments at Scale

Bank for International Settlements General Manager Pablo Hernández de Cos has renewed criticism of stablecoins, arguing that they do not credibly function as a means of payment at scale and that tokenized bank deposits offer a stronger alternative for harnessing tokenization while preserving the monetary system's foundations. Speaking on Friday, de Cos — a candidate to succeed European Central Bank President Christine Lagarde next year — pushed back against growing industry claims that stablecoins can rival or replace traditional payment rails for everyday transactions.

De Cos acknowledged that stablecoins could lower government borrowing costs, an argument echoed by US Treasury Secretary Scott Bessent. However, he warned of knock-on effects for consumers: if customers shift bank deposits into stablecoins, banks could face higher funding costs and pass those expenses on through increased borrowing rates for households and businesses. He also cited limited interoperability between stablecoin platforms, inconsistent application of anti-money laundering controls, and the risk that growing use of US dollar-pegged stablecoins abroad could undermine monetary sovereignty and weaken domestic policy.

A new study from the BIS-linked Financial Stability Institute underscores the regulatory fragmentation behind those concerns. Comparing frameworks in the United States, European Union, United Kingdom, Hong Kong, and Singapore, the FSI found substantial differences in which entities may issue stablecoins and what additional business activities they can conduct. The US GENIUS Act and Singapore take relatively restrictive approaches, generally prohibiting payment stablecoin issuers from lending, staking, proprietary trading, and custody of third-party crypto assets. Hong Kong, the UK, and EU take a more permissive approach, allowing some additional activities with separate authorization or regulatory consent. The diverging rules come as governments worldwide race to formalize oversight of a rapidly expanding market.