BIS Warns of Stablecoins’ Systemic Risks Amid Global Adoption Push

The Bank for International Settlements has issued a scathing critique of stablecoins in its 2025 annual report, challenging their perceived role as stabilizing forces in cryptocurrency markets. These fiat-backed digital assets, increasingly embraced by regulators in the EU and US, fail to meet the BIS's criteria for effective monetary instruments.

Three fundamental flaws undermine stablecoins according to the BIS: lack of universal acceptance, insufficient flexibility during economic stress, and vulnerability to financial crimes. The report characterizes them as primitive "digital bearer instruments" rather than true monetary solutions, highlighting their dependence on advance payment mechanisms that limit crisis responsiveness.

While stablecoins continue gaining market share, the BIS advocates for regulated tokenization as a superior alternative. This position creates tension with jurisdictions actively developing stablecoin frameworks, suggesting coming policy battles over cryptocurrency's role in mainstream finance.