Stablecoins “do not credibly function as a means of payment at scale,” according to Bank for International Settlements General Manager Pablo Hernández de Cos. The tokens, he argued, raise interoperability, anti-money-laundering and monetary-sovereignty concerns that tokenized bank deposits would handle more effectively.
The BIS has been ramping up scrutiny of private digital money. De Cos positioned tokenized deposits, bank liabilities issued on a distributed ledger, as the institution’s preferred path forward for payments innovation. “Tokenised deposits offer a more direct path to harness tokenisation while preserving the monetary system’s foundations,” he said, according to Reuters reporting cited by Cointelegraph. The upshot: the BIS wants payments to remain on bank balance sheets, not migrate to tokens issued by non-bank operators.
De Cos is a candidate to succeed European Central Bank President Christine Lagarde next year. He singled out two structural weaknesses in stablecoin arrangements. Limited interoperability between platforms fragments payments across issuers and chains. Anti-money-laundering controls prove difficult to apply consistently across those fragmented systems. Each gap weakens the case for stablecoins as everyday transaction infrastructure at scale.
His concerns extend to the banking system itself. Shift deposits into stablecoins and banks could face higher funding costs. Those expenses get passed on to households and businesses through higher borrowing rates. That framing is new. The BIS had previously treated stablecoin risk mainly as a run-redemption problem. De Cos is now linking it to retail credit costs.
The international dimension figured in his remarks as well. Growing use of US dollar-pegged stablecoins outside the United States could undermine monetary sovereignty and weaken domestic monetary policy in those jurisdictions. Dollar-pegged tokens dominate global stablecoin issuance, and emerging-market users increasingly treat them as dollar substitutes.
De Cos acknowledged one counterargument. Stablecoins could lower government borrowing costs, a position US Treasury Secretary Scott Bessent has also advanced. He did not dispute the claim. He positioned it as a narrow benefit that does not resolve the payments-credibility question.
The remarks coincided with the release of FSI Brief No. 33, “Regulating stablecoin issuance: permissible entities and activities,” published Thursday by the BIS-linked Financial Stability Institute. The study compares stablecoin rules across five jurisdictions: the United States, the European Union, the United Kingdom, Hong Kong and Singapore.
What it found: substantial differences in which entities may issue stablecoins and what other business activities they can conduct. The US and Singapore take relatively restrictive approaches toward non-bank issuers. Under the US GENIUS Act, lending, staking, proprietary trading and custody of third-party crypto assets generally fall outside permitted activities for payment stablecoin issuers. A licensed stablecoin issuer in the US, in other words, cannot run an exchange or a lending desk under the same roof.
Hong Kong, the UK and the EU are less restrictive. They allow some additional activities with separate authorization, regulatory consent or other applicable permissions. The divergence means two functionally identical dollar tokens could face entirely different operating constraints depending on where their issuer is chartered.
One finding cuts across all five regimes. Restrictions apply to the issuing entity rather than the wider corporate group. Other group members can conduct activities the stablecoin issuer itself cannot. A parent company could operate a trading desk while its regulated subsidiary issues the token, as long as the firewall holds.
The BIS has not yet published a formal policy recommendation on stablecoin issuance. De Cos’s remarks and the FSI brief together sketch the direction of travel: tighter issuer constraints, a preference for bank-issued alternatives, and skepticism that the current stablecoin model can carry the weight of a payments system.
