The Bank for International Settlements issued a fresh warning on stablecoins, arguing that private digital tokens fall short of the core requirements for sound money and pose fragmentation risks to the global financial system.
In its assessment, the Basel-based institution said private stablecoins lack sufficient safeguards around acceptance, price stability, and redemption certainty. Those gaps, the BIS argued, could push financial activity onto parallel rails outside traditional regulatory oversight, splintering settlement infrastructure across competing private networks.
The BIS did not name specific coins or issuers. Instead, it urged policymakers to shift focus toward tokenized forms of central bank money and commercial bank deposits as alternatives. A digital version of a central bank liability, the logic goes, would inherit the state's credit standing and legal claim on settlement finality, anchoring users to the regulated system rather than to the issuer's balance sheet.
The warning reflects a widening policy consensus among major regulators. The EU's Markets in Crypto Assets Regulation (MiCA), which entered force this year, imposed reserve and redemption requirements on stablecoin issuers. In the US, multiple legislative proposals have sought to restrict stablecoin issuance to banks and bank-like entities under direct federal oversight.
What the BIS framed as risk is also a question of institutional power. If stablecoins fragment settlement into private networks, central banks lose direct visibility into payment flows and lose the ability to implement monetary policy through traditional channels. Tokenized forms of state or regulated bank money would restore that operational control and reduce the surface for regulatory arbitrage.
The BIS did not specify a timeline for policymaker action or detail which jurisdictions were most lagging in token-based settlement frameworks. Its call amounts to a push for expedited work, though the actual pace of central bank digital currency rollouts remains slow in most major economies.