BIS chief Pablo Hernández de Cos argued that stablecoins have yet to gain enough credibility for large-scale payments, while a new FSI study has revealed significant differences in rules governing issuers.
The Bank for International Settlements has renewed its criticism of stablecoins, raising doubts about their reliability as everyday money while governments worldwide develop regulatory frameworks for the tokens.
BIS General Manager Pablo Hernández de Cos, who is being considered as a possible successor to European Central Bank President Christine Lagarde next year, argued that stablecoins cannot reliably serve as a payment method on a large scale. He added that tokenized bank deposits provide a more effective alternative, according to a Reuters report published Friday.
“Tokenised deposits offer a more direct path to harness tokenisation while preserving the monetary system’s foundations,” de Cos said.
The remarks come as regulators around the world navigate growing stablecoin adoption, while a new study by the BIS-affiliated Financial Stability Institute (FSI) highlights major differences in how leading markets regulate stablecoin issuers.
Stablecoins Could Help Lower Government Borrowing Costs
Hernández de Cos acknowledged that stablecoins could help reduce government borrowing costs, a view that has also been expressed by US Treasury Secretary Scott Bessent.
However, the impact could work both ways for consumers. Hernández de Cos said that if customers shift bank deposits into stablecoins, banks may face increased funding costs and pass those expenses on to households and businesses through higher borrowing rates.
He also highlighted weak interoperability among stablecoin platforms and the challenge of applying anti-money laundering controls consistently. He warned that wider use of US dollar-pegged stablecoins outside the US could threaten monetary sovereignty and reduce the effectiveness of domestic monetary policy.
Stablecoin Issuers Face Varying Rules Across Global Markets
The FSI study, released on Thursday, examined stablecoin regulations across the US, European Union, United Kingdom, Hong Kong and Singapore, revealing notable differences in which entities can issue stablecoins and which additional business activities they are allowed to pursue.
The US and Singapore follow relatively strict rules for non-bank stablecoin issuers. Under the US GENIUS Act, payment stablecoin issuers generally cannot engage in lending, staking, proprietary trading or the custody of crypto assets belonging to third parties.
Hong Kong, the UK and EU follow a more flexible approach, permitting certain additional activities when separate authorization, regulatory approval or other required permissions are obtained.
The researchers also found that restrictions in all five jurisdictions apply to the issuing entity rather than the broader corporate group, allowing other group members to carry out activities that the stablecoin issuer itself cannot.
