Pablo Hernández de Cos, general manager of the Bank for International Settlements (BIS), warned at a Bank of Japan seminar in Tokyo that U.S. dollar-linked stablecoins could have "material consequences" for global financial stability if they continue scaling outside traditional banking safeguards. He argued the current infrastructure is insufficient for them to function as reliable payment means.
USDT and USDC Behave More Like ETFs Than Cash
De Cos singled out the two largest stablecoins, USDT and USDC, noting their redemption fees and conditional requirements make them resemble exchange-traded funds rather than liquid cash. Issuers back these tokens with short-term government debt and bank deposits. During market stress, a rush of redemptions could force issuers to dump reserve assets, potentially destabilizing the very markets they rely on for liquidity.
Europe Moves to Expand MiCA to Non-Euro Stablecoins
Denis Beau, First Deputy Governor of the Bank of France, urged the European Union to broaden the Markets in Crypto Assets (MiCA) regulation to limit non-euro stablecoins in daily payments, preventing regulatory arbitrage where issuers shift operations across jurisdictions during crises. The European Central Bank highlighted that both euro stablecoins and money market funds perform "liquidity transformation" but operate under different transparency levels.
AML Gaps on Public Blockchains
De Cos warned that many transactions occur in "unhosted" wallets, allowing a significant portion of activity to bypass Anti-Money Laundering and Counter-Terrorism Financing controls. This lack of oversight, combined with permissionless blockchains, creates channels for illicit flows.
Swiss Banks Pilot Franc Stablecoin
In response, Swiss banks including UBS have launched a pilot for a franc-denominated stablecoin, aiming to harness blockchain technology while keeping the currency within the regulated financial system.
Source: CryptoComLearn, original article: https://crypto.news/bis-chief-warns-u-s-dollar-stablecoins-could-destabilize-global-markets