The Bank for International Settlements (BIS) has emphasized the urgent need for a global regulatory framework for stablecoins, suggesting that these digital assets function more like investment products than traditional payment methods. This assertion comes from BIS General Manager Pablo Hernández de Cos, who pointed out that the stablecoin market is heavily concentrated, with USDT and USDC alone representing approximately 85% of the total issuance, which has surpassed $300 billion.
De Cos raised concerns about potential risks to monetary policy and financial stability posed by fiat-pegged stablecoins, particularly given their tendency to deviate from their pegged values and issues surrounding redemption. He drew parallels between stablecoins and exchange-traded funds, highlighting the risks associated with varying regulations across different jurisdictions that may lead to regulatory arbitrage.
He further warned about the dangers of mass withdrawals from stablecoin systems, advocating for measures such as access to deposit insurance or central bank credit lines to mitigate these risks. Additionally, he proposed banning interest payments on stablecoins to curb the potential outflow of funds from traditional bank deposits.
