{"id":1543670,"date":"2025-06-25T15:25:00","date_gmt":"2025-06-25T19:25:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1543670"},"modified":"2025-06-25T15:25:00","modified_gmt":"2025-06-25T19:25:00","slug":"bis-claims-stablecoins-fail-as-money-calls-for-strict-limits-on-their-role","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/bis-claims-stablecoins-fail-as-money-calls-for-strict-limits-on-their-role\/1543670\/","title":{"rendered":"BIS Claims Stablecoins Fail As Money, Calls For Strict Limits On Their Role"},"content":{"rendered":"

BIS Claims Stablecoins Fail As Money, Calls For Strict Limits On Their Role<\/span><\/p>\n

\n

Authored by Amin Haqshanas via CoinTelegraph.com,<\/em><\/a><\/p>\n

A new report from the Bank for International Settlements (BIS) challenged the notion that stablecoins can serve as money in a modern financial system.<\/p>\n

<\/a><\/p>\n

According<\/a>\u00a0to the BIS Annual Economic Report 2025, stablecoins fail the fundamental tests of \u201csingleness,\u201d \u201celasticity\u201d and \u201cintegrity,\u201d three critical criteria that define effective monetary instruments.<\/p>\n

The BIS described stablecoins as \u201cdigital bearer instruments\u201d that resemble financial assets more than actual money. \u201cStablecoins perform poorly when assessed against the three tests for serving as the mainstay of the monetary system,\u201d the report said.<\/p>\n

Unlike central bank-backed money, which is accepted \u201cat par\u201d and requires no background checks,\u00a0private entities issue stablecoins<\/a>\u00a0and often trade at fluctuating rates. This undermines the core principle of monetary singleness, the report claimed.<\/p>\n

<\/a><\/p>\n

Stablecoins continue to grow, but volatility remains. Source: BIS<\/em><\/p>\n

Stablecoins fail elasticity and integrity tests<\/h2>\n

Elasticity, the second test, is crucial for absorbing shocks and meeting large-value payment demands, BIS said in its report.<\/p>\n

It pointed out that \u201cany additional supply of stablecoins thus requires full upfront payment by its holders,\u201d likening it to a \u201cstrict cash-in-advance setup\u201d that contrasts with the flexibility of modern banking systems, where central banks provide liquidity as needed.<\/p>\n

The third and perhaps most damning failure lies in the area of integrity. The report claimed that stablecoins\u2019 design, especially those transacted via unhosted\u00a0wallets on public blockchains<\/a>, makes them prone to financial crime.<\/p>\n

\u201cStablecoins have significant shortcomings when it comes to promoting the integrity of the monetary system,\u201d the BIS noted, emphasizing their vulnerability to money laundering, sanctions evasion and terrorist financing.<\/p>\n

<\/a><\/p>\n

Cross-border use of stablecoins has been rising. Source: BIS<\/em><\/p>\n

Stablecoins should have a limited role<\/h2>\n

While acknowledging the continued demand for stablecoins due to\u00a0features like cross-border accessibility<\/a>\u00a0and lower transaction costs, the BIS argued that they should only play a limited, well-regulated role.<\/p>\n

\u201cSociety can re-learn the historical lessons about the limitations of unsound money,\u201d<\/strong><\/em> the report cautioned. \u201cBold action by central banks and other public authorities can push the financial system along the right path, in partnership with the financial sector.\u201d<\/p>\n

Circle, the company behind USDC, saw its stock drop more than 15% on Tuesday after the BIS report, hitting $222. CRCL shares had\u00a0reached an all-time high<\/a>\u00a0of $299 on Monday.<\/p>\n

Despite its hard take on stablecoins, the BIS report praised tokenization as a \u201ctransformative innovation\u201d for the next-generation monetary and financial system. It said tokenization builds on the current financial system rather than replacing it.<\/p>\n

Some in the crypto community\u00a0said<\/a>\u00a0it is \u201cno surprise\u201d that the BIS paper was generally negative on stablecoins, given that it is a \u201cregulatory body owned by global central banks.\u201d<\/p>\n

\u201cThe BIS is hysterical in its opposition to crypto,\u201d<\/strong><\/em> Jim Walker, chief economist at Aletheia Capital,\u00a0wrote<\/a>. \u201cThe first criterion, backed by a central bank, should make it a laughing stock given the historical failures of those institutions around the world.\u201d<\/strong><\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nWed, 06\/25\/2025 – 11:25<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/crypto\/bis-claims-stablecoins-fail-money-calls-strict-limits-their-role<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

BIS Claims Stablecoins Fail As Money, Calls For Strict Limits On Their Role Authored by Amin Haqshanas via CoinTelegraph.com, A new report from the Bank…<\/p>\n","protected":false},"author":0,"featured_media":1543671,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1543670","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-6tzU","jetpack_featured_media_url":"https:\/\/bugaluu.com\/news\/wp-content\/uploads\/sites\/3\/2025\/06\/0197a6c4-46a6-790f-a15d-7eb4c139-8XlO9V.jpg","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1543670","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1543670"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1543670\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1543671"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1543670"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1543670"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1543670"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}