BIS Warns Stablecoin Hype May Compromise Financial Stability

The Bank for International Settlements (BIS) has cast doubt on the ability of stablecoins to become a consistent source of currency. BIS general manager Pablo Hernández de Cos stated that tokenized bank deposits will be an alternative route to integrating blockchain into the financial system.

De Cos said, 'Tokenized deposits will make it easier to use the benefits of tokenization and keep the basics of the monetary system intact.'

The BIS has been researching stablecoin regulations in key economies, including the US, EU, UK, Hong Kong, and Singapore. The Financial Stability Institute (FSI) report found that there are notable differences in the issuance of stablecoins and other services provided by firms.

Regulators have implemented new policies for the industry, with the US and Singapore imposing relatively stringent laws on non-bank stablecoin issuers. However, Hong Kong, the UK, and the EU have a more relaxed approach, allowing companies to engage in additional activities if they receive regulatory approval.