A new report from the Bank for International Settlements (BIS) challenges a core assumption in crypto: even stablecoins backed by 100% reserves can depeg. When panic strikes and redemptions surge, the speed at which reserves can be liquidated and distributed becomes the decisive factor—and current infrastructure often falls short.
The study compares stablecoins to Eurodollars, U.S. dollar deposits held outside American jurisdiction. Traditional banks maintain par value through central bank settlement, repo markets and emergency liquidity facilities. Stablecoins operate without these institutional safeguards, relying solely on their own reserve pools. Crypto research firm Delphi Digital stressed that collateral ratios alone offer no guarantee of stability if redemption demands outpace an issuer's ability to convert reserves into cash.
Reserve Accessibility Over Collateral Ratio
The BIS analysis shows that how accessible reserves are matters more than how large they are. Under stress, reserves held across different banks, custodians or blockchains create friction. If an issuer cannot quickly convert them into the assets or cash needed for redemptions, the peg breaks. In traditional finance, central banks act as lenders of last resort and provide repo liquidity. Stablecoin markets lack such backstops, making them vulnerable to self-reinforcing runs.
Parallels With 19th-Century Wildcat Banks
The report also draws a historical parallel to 19th-century American wildcat banks, which operated across isolated jurisdictions without coordinated oversight and often failed during runs. Delphi Digital noted that U.S. banking eventually stabilized only after moving to a unified federal regulatory framework. Today, stablecoin issuers are similarly fragmented across blockchains and national borders. Without shared infrastructure or a common lender of last resort, the sector has no coordinated mechanism to absorb major shocks.
Regulatory Response Underway
Lawmakers in the U.S., Europe and parts of Asia are drafting or implementing rules covering reserve management, licensing and operational requirements for stablecoin issuers. The BIS argues that unified regulation could steer the sector toward a more stable future, akin to the modern banking system. The report states: "Even with full collateral, stablecoins remain at risk of breaking their peg if underlying reserves become inaccessible during episodes of heavy redemption pressure." As regulatory frameworks take shape, the interplay between decentralized digital assets and traditional financial standards will stay under close watch. Stablecoins' evolution will depend on whether major economies can coordinate effectively.