BIS Chief Says Stablecoins Lack Credibility for Payments at Scale

The Bank for International Settlements is escalating its criticism of stablecoins, with General Manager Pablo Hernández de Cos arguing that the tokens do not credibly function as a means of payment at scale. Speaking ahead of regulatory developments worldwide, de Cos — a candidate to succeed European Central Bank President Christine Lagarde next year — positioned tokenized bank deposits as a more viable alternative. "Tokenised deposits offer a more direct path to harness tokenisation while preserving the monetary system's foundations," he told Reuters on Friday.

De Cos acknowledged that stablecoins could lower government borrowing costs, echoing comments from US Treasury Secretary Scott Bessent, but warned of unintended consequences. If consumers shift bank deposits into stablecoins, banks could face higher funding costs and pass those expenses on through elevated lending rates for households and businesses. He also cited limited interoperability between stablecoin platforms, inconsistent anti-money laundering enforcement, and risks that the growing use of US dollar-pegged stablecoins abroad could erode monetary sovereignty and weaken domestic policy tools.

A new study from the BIS-linked Financial Stability Institute, published Thursday, underscores how fragmented the global regulatory landscape remains. The FSI compared stablecoin frameworks across the United States, European Union, United Kingdom, Hong Kong, and Singapore, finding substantial differences in which entities may issue stablecoins and what auxiliary activities they can pursue. The US GENIUS Act and Singapore take relatively restrictive approaches toward non-bank issuers, generally prohibiting lending, staking, proprietary trading, and third-party crypto custody for payment stablecoin issuers. Hong Kong, the UK, and the EU permit a broader range of activities with separate authorization or regulatory consent, highlighting the lack of a unified international standard as adoption expands.