A new report from the Bank for International Settlements (BIS) casts doubt on the viability of stablecoins as genuine forms of money within today’s financial systems.
In its Annual Economic Report 2025, the BIS argues that stablecoins fall short of meeting three essential benchmarks for sound money: singleness, elasticity, and integrity.
Labeling stablecoins as “digital bearer instruments,” the BIS suggests they resemble speculative financial assets more than reliable currency. “Stablecoins perform poorly when measured against the core standards for anchoring the monetary system,” the report states.
Unlike central bank-issued money—which is universally accepted at face value without additional scrutiny—stablecoins are issued by private firms and often trade at variable prices. This, the BIS argues, undermines the foundational concept of monetary singleness.
Stablecoins fail elasticity and integrity tests
The second key criterion—elasticity—is vital for absorbing financial shocks and facilitating large-value payments, the BIS explains in its report.
The BIS highlights that stablecoin issuance requires full upfront payment from users, effectively creating a “strict cash-in-advance setup.” This model starkly contrasts with modern banking systems, where central banks can inject liquidity as needed to support economic stability.
The third, and perhaps most serious, shortcoming relates to integrity. The report warns that the structural design of stablecoins—particularly those transacted through unhosted wallets on public blockchains—makes them susceptible to illicit activity.
“Stablecoins have significant shortcomings when it comes to promoting the integrity of the monetary system,” the BIS asserts, citing heightened risks of money laundering, sanctions evasion, and terrorist financing.
Stablecoins should play only a restricted role
While the BIS acknowledges ongoing demand for stablecoins—citing benefits like cross-border accessibility and lower transaction costs—it maintains that their role should remain limited and subject to strict regulation.
“Society can re-learn the historical lessons about the limitations of unsound money,” the report warns. “Bold action by central banks and other public authorities can steer the financial system in the right direction, in collaboration with the financial sector.”
Following the release of the report, shares of Circle, the company behind USDC, dropped over 15% on Tuesday, falling to $222. This came just a day after CRCL stock hit an all-time high of $299.
Despite its critical stance on stablecoins, the BIS report praised tokenization as a “transformative innovation” poised to shape the future of the financial system. Unlike stablecoins, tokenization builds upon the existing infrastructure rather than seeking to replace it, the report noted.
Reactions from the crypto community were swift. Some argued that the BIS’s skepticism was to be expected, given its status as a regulatory institution owned by global central banks.
“The BIS is hysterical in its opposition to crypto,” wrote Jim Walker, chief economist at Aletheia Capital Limited. “The first criterion—being backed by a central bank—should disqualify the BIS’s argument, considering the historic failures of those very institutions.”
