BIS Challenges Stablecoins as Viable Global Payment Infrastructure

BIS General Manager Rejects Stablecoins as Payment Rail

De Cos identified tokenized bank deposits as the route that integrates distributed ledger architecture without altering monetary-system fundamentals. The remarks accompanied a Financial Stability Institute survey of stablecoin rules across the US, EU, UK, Hong Kong, and Singapore.

Reserve Pressure and Regulatory Mapping

De Cos acknowledged a structural upside: expanded stablecoin demand could absorb US Treasury supply and compress government borrowing costs, a position previously articulated by Treasury Secretary Scott Bessent. Recent reporting cited in the coverage projects the stablecoin market at $3.7 trillion by decade-end, a scenario that becomes more likely with passage of the GENIUS Act. Rising private-sector Treasury holdings tied to stablecoin reserves reshape the collateralization profile of the largest USD-pegged supply.

The funding-side risk runs the other direction. De Cos warned that migration of household balances from bank deposits into stablecoins removes a core funding source from the banking sector, raising borrowing costs. The FSI paper additionally flagged low interoperability across stablecoin networks and uneven anti-money-laundering enforcement, complicating cross-issuer attestation and fiat-equivalent verification.

The FSI study documented material divergence. The US and Singapore impose restrictive regimes: under the GENIUS Act, non-bank US issuers are barred from lending, staking, proprietary trading, and third-party cryptoasset custody. Hong Kong, the UK, and the EU permit additional activities subject to regulatory approval. Across all five markets, restrictions attach to the issuer entity, not the wider corporate group.

UK policy is moving in the opposite direction. On August 27, HM Treasury announced a secondary statutory objective for the Bank of England covering payment-system innovation and digital money, including stablecoins, subordinate to the financial stability primary objective. The change enters the Financial Services and Markets Bill for House of Lords debate on September 7 and 9. BoE Deputy Governor Sarah Breeden endorsed the mandate. The BoE's June 2026 draft Code of Practice for sterling-denominated systemic stablecoin issuers introduced a temporary £40 billion issuance cap per product. Consultation closes September 22; finalization is targeted by year-end. Systemic stablecoins are expected to operate in the UK from 2027; non-systemic variants remain under FCA oversight and explicitly exclude cryptoasset trading use cases.

Separately, Risk.net reported that the former Citi payments head and Ubyx founder proposed stablecoin consortia as an interim arrangement before global systemically important banks issue individual tokens.

Monitoring Points

Three data points warrant tracking. First, the FSI coordination track on interoperability standards, which determines whether cross-issuer attestation can scale. Second, the BoE consultation outcome and any adjustment to the £40 billion issuance guardrail, a direct leverage point on sterling-pegged liquidity supply. Third, GENIUS Act implementation milestones, which will fix the permitted activity perimeter for non-bank issuers and, by extension, the reserve composition backing USDT and its peers.