Stablecoins have come under renewed scrutiny, with the Bank for International Settlements (BIS) questioning whether they can serve as a consistent form of currency as authorities across major economies roll out new regulatory frameworks for the sector.

Pablo Hernández de Cos, general manager of the BIS, said stablecoins cannot be regarded as a credible means of payment, according to Reuters. Instead, he argued that tokenized bank deposits offer an alternative path for integrating blockchain technology into the financial system. The remarks align with the BIS's broader "unified ledger" vision, laid out in its 2023 annual economic report, in which central banks and commercial banks jointly operate tokenized versions of central bank money and commercial bank deposits on shared infrastructure rather than relying on private stablecoins.

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

His remarks come as regulators in key economies continue to shape stablecoin rules, a trend also documented in a recent research report from the Financial Stability Institute (FSI), a BIS arm (FSI brief).

Stablecoins Face Questions Over Wider Adoption

De Cos acknowledged that stablecoins could deliver certain benefits, including lowering government borrowing costs. US Treasury Secretary Scott Bessent has made the same point.

https://x.com/SecScottBessent/status/1935027160374210573

— Treasury Secretary Scott Bessent (@SecScottBessent) June 17, 2025

Recent reporting projects that stablecoins could grow into a $3.7 trillion market by the end of the decade, a scenario made more likely by the passage of the GENIUS Act. A thriving stablecoin ecosystem would drive private-sector demand for US Treasuries, which back the tokens, Bessent has argued. The GENIUS Act, signed into law in July 2025, established a federal framework for payment stablecoin issuance in the US, requiring full backing by high-quality liquid assets.

Nevertheless, de Cos cautioned that wider stablecoin use could raise costs for consumers if large volumes of funds shifted from bank deposits into digital coins. If consumers move savings into stablecoins, banks would lose a key funding source, which could raise expenses for banks and, ultimately, for consumers and firms seeking credit.

He also cited low interconnection between stablecoin platforms and difficulties in enforcing anti-money laundering rules as further concerns. Another potential issue stems from the growing popularity of US dollar-pegged stablecoins outside the United States; according to de Cos, broad adoption of such tokens could undermine the monetary sovereignty of certain nations. The point echoes long-standing concerns from emerging-market policymakers that dollar-linked digital tokens could accelerate informal dollarization, weakening local central banks' control over monetary conditions.

Global Stablecoin Rules Take Different Paths

The FSI study, released on Thursday, examined stablecoin regulations in the US, EU, UK, Hong Kong, and Singapore. It found notable differences in who may issue stablecoins and what other services participating firms can provide. The divergence matters for global firms: an issuer licensed and permitted to offer ancillary services in one jurisdiction may find the same combination of activities restricted in another, complicating cross-border business models.

The US and Singapore have imposed relatively strict rules on stablecoin issuance by non-banks. In the US, under the GENIUS Act, non-bank stablecoin issuers may not engage in activities such as lending, staking, proprietary trading, or holding cryptoassets on behalf of third parties.

Hong Kong, the UK, and the EU take a more relaxed approach: firms may pursue certain additional activities provided they obtain the necessary regulatory approval or other permission. In the EU, stablecoins fall under the Markets in Crypto-Assets (MiCA) regulation, which took full effect at the end of 2024, while the UK and Hong Kong have each introduced their own stablecoin-specific regimes.

The FSI researchers also noted that in all five jurisdictions, the restrictions apply to the stablecoin issuer itself rather than the entire corporate group. As a result, other companies within the same group may conduct activities that are off-limits to the regulated issuing entity. That structural gap is something regulators may revisit as the sector grows, given the potential for activity to migrate within groups to less regulated affiliates.

The findings underscore regulators' growing focus on stablecoin issuers as governments attempt to balance innovation against financial stability.