BIS Slams Stablecoins, Calls Them Ill-Suited for Modern Monetary Systems

Stablecoins are failing where it matters most, says the Bank for International Settlements (BIS), which sharply criticized the asset class in its latest annual report.

Far from being modern money, stablecoins fall short on key fundamentals such as trust, flexibility, and system integrity.

BIS argues that stablecoins function more like speculative financial assets than currency. Because they’re issued by private firms and not universally accepted at fixed value, they break the concept of monetary “singleness” — the idea that one unit of money is always worth the same as another.

Their structure, the report notes, requires users to front full value before issuance, leaving no room for monetary expansion in times of stress — a stark contrast to how central banks inject liquidity. Additionally, BIS points to the risks associated with public blockchains and unregulated wallets, raising alarms over money laundering and illicit flows.

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Despite their popularity in cross-border transactions, the BIS recommends limiting stablecoin usage to tightly governed roles. It insists that lessons from past monetary crises must not be forgotten in the rush toward digital finance.

Interestingly, the report was far more positive about tokenization, calling it a promising tool to upgrade — rather than replace — the existing financial architecture.

Markets reacted swiftly. Shares of Circle (CRCL), issuer of the USDC stablecoin, plunged over 15% following the release.

Alexander Stefanov

With over 8 years of experience in the cryptocurrency and blockchain industry, Alexander is a seasoned content creator and market analyst dedicated to making digital assets more accessible and understandable. He specializes in breaking down complex crypto trends, analyzing market movements, and producing insightful content aimed at educating both newcomers and seasoned investors. Alexander has built a reputation for delivering timely and accurate analysis, while keeping a close eye on regulatory developments, emerging technologies, and macroeconomic trends that shape the future of digital finance. His work is rooted in a passion for innovation and a firm belief that widespread education is key to accelerating global crypto adoption.