BIS Warns of Potential Risks from Large Stablecoins

The Bank for International Settlements (BIS) has raised concerns about the growing popularity of US dollar-denominated stablecoins, warning that they could pose significant risks to financial stability and economic policy.

BIS General Manager Pablo Hernández de Cos emphasized the need for global coordination on stablecoin regulation during a recent speech in Tokyo. He noted that current arrangements for stablecoins fall short of what is needed for widespread use as a means of payment, despite offering faster cross-border transfers and integration with smart contracts.

De Cos highlighted the characteristics of large US dollar stablecoins, such as USDt and USDC, which share features with investment products rather than traditional cash. He noted that these tokens are subject to fees and conditions on primary market redemptions and can experience price divergence from par in secondary markets.