The Bank for International Settlements published a BIS Bulletin assessing how rapid stablecoin growth and deepening ties to the traditional financial system are reshaping policy priorities. The paper argues that potential spillovers to the regulated system can no longer be ruled out and that applying the principle of “same risks, same regulation” is inherently limited for stablecoins, requiring tailored approaches that address their borderless and pseudonymous operation. The Bulletin notes that the number of active stablecoins rose from around 60 in mid-2024 to over 170, while market capitalisation increased from about USD 125 billion to around USD 255 billion, with roughly 90% of value concentrated in two issuers and almost 99% of market value denominated in US dollars. It highlights persistent price volatility and frequent deviations from par even for fiat-backed coins, alongside major integrity challenges from AML/CFT and KYC enforcement given cross-border transfers to exchanges and self-hosted wallets. On monetary sovereignty, quarterly cross-border trading volumes exceeded USD 400 billion for the two largest coins, and stablecoin usage in cross-border transactions tends to rise after high inflation and foreign exchange volatility, potentially weakening domestic monetary policy and undermining foreign exchange regulations or capital controls. The paper also points to growing impacts on safe-asset markets, estimating that a USD 3.5 billion inflow into stablecoins can reduce Treasury bill yields by around 2.5–5 basis points, while outflows raise yields by two to three times as much, raising fire-sale and liquidity risk management concerns. As policy direction, it describes bespoke, function-based frameworks that leverage blockchain traceability for more effective integrity rules at points of contact with the regulated system, notes that more restrictive regimes may be needed where safeguards are absent, and stresses the importance of international cooperation and technological neutrality.
Bank for International Settlements 2025-07-11
Bank for International Settlements Bulletin reviews stablecoin growth and outlines the case for bespoke regulation
The Bank for International Settlements released a BIS Bulletin analyzing stablecoins' rapid growth and integration with traditional finance, highlighting policy challenges. It notes significant market concentration, price volatility, and integrity issues, with stablecoin usage impacting monetary sovereignty and safe-asset markets. It advocates for tailored regulatory frameworks leveraging blockchain traceability and emphasizes international cooperation and technological neutrality.