The Bank for International Settlements (BIS) has hit the ground running. In its latest report, the global banking watchdog didn’t mince words: stablecoins aren’t up to snuff when it comes to acting like real money. While they may walk like a dollar and talk like a dollar, BIS says they don’t have the backbone to carry the financial system.
Image 1: (Source: digit.fyi)
Stablecoins are digital currencies tied to “real” money like the U.S. dollar. In theory, they’re supposed to be rock solid—hence the name. But BIS says the name doesn’t match the game. Instead of being sturdy pillars in the financial house, they’re more like cardboard cutouts—hollow and fragile.
Stablecoins Flunk the Money Test
According to the BIS, good money has to pass three big tests: singleness, elasticity, and integrity. If a form of money can’t check all those boxes, it’s not ready for center stage.
Let’s break it down.
First up: singleness. That’s just a fancy way of saying money should be accepted everywhere and treated the same no matter where or how it’s used. A ten-dollar bill doesn’t suddenly turn into $9.92 when you use it at a different store. But some stablecoins do just that. Their value can wobble like a loose wheel, making them unreliable for everyday use.
That’s a red flag. When something claiming to be stable doesn’t hold its ground, it throws a wrench into the works. People stop trusting it. And once trust is gone, the whole system starts to creak.
Next: elasticity. In times of crisis, real money systems can stretch like a rubber band. Central banks can pump in more cash when the economy’s running on fumes or pull back when things overheat.
But stablecoins? Not a chance. They only grow if people fork over real cash first. That’s like trying to water a garden with a dry hose—you won’t get very far. BIS says this makes stablecoins rigid and slow, unable to keep up with the demands of a living, breathing economy.
Then comes integrity. And this is where things really start to unravel.
According to BIS, stablecoins often operate in the wild west of crypto—public blockchains and anonymous wallets. That might sound cool and cutting-edge, but it also means the door is wide open to shady behaviour. From money laundering to dodging sanctions, these coins can become the getaway car for financial crimes.
Image 2 (Source: Reuters)
A Small Role, If Any
Even with all these issues, BIS isn’t saying stablecoins should be thrown in the trash. Instead, it’s urging governments to keep them on a short leash.
The report warns that letting unregulated stablecoins grow too big could come back to bite us, just like unstable currencies did in the past. BIS believes the financial world doesn’t need to reinvent the wheel—it just needs to make the current system smarter and safer.
The BIS — the “central bank of central banks” — in “hysterical” opposition to stablecoins.
Their main complaint is stablecoins lack the “flexibility” of banking systems. As in banks can’t print them ✌️https://t.co/7mvXGWNfjI
— Peter St Onge, Ph.D. (@profstonge) June 25, 2025
Circle Takes a Hit
The BIS report didn’t just ruffle feathers—it hit wallets too. Circle, the company behind USDC (one of the top stablecoins), saw its stock price take a nosedive, falling over 15% in a single day. The message from investors? If regulators are tightening the screws, stablecoin companies might have a rough road ahead.
Not all digital money got burnt in the fire. While stablecoins took a beating, tokenisation came out smelling like roses.
Read also: Russia Pushes for Bitcoin Mining Supremacy With Energy Surge
Tokenisation takes real-world assets—be it shares, property, or bonds—and wraps them up in digital form. The BIS has given this approach a strong nod of approval. Unlike stablecoins, which often rock the boat, tokenisation works with the grain of the existing system. It doesn’t aim to tear things down, but rather greases the wheels using tech to speed things up and iron out the bumps.
So, while BIS gave stablecoins a failing grade, it’s still rolling out the welcome mat for tech that plays by the rules.
