BIS: Dollar Stablecoins Behave Like ETFs and Pose a Risk to Banks

On Monday, Bank for International Settlements (BIS) general manager Pablo Hernandez de Cos spoke at a Bank of Japan seminar in Tokyo, calling for tighter global rules on stablecoins. He warned that assets like USDT and USDC could have "material consequences" for financial stability and monetary policy if they grow large enough to rival traditional money.

How a crisis could unfold

De Cos laid out a specific risk chain. Stablecoin issuers hold reserves in short-term government debt and bank deposits. A stress-driven rush to exit would force those assets into markets already under pressure. Banks holding issuer deposits would face funding stress almost immediately.

The ETF comparison is not just theoretical. If USDT or USDC grow to the point where they function as everyday money, a collapse of either would produce systemic effects similar to the failure of a large money market fund.

AML gaps on public blockchains

Public blockchains and unhosted wallets let a significant share of stablecoin activity bypass AML and counter-terrorism financing controls. De Cos called this a direct problem. Without targeted safeguards at on- and off-ramps, stablecoins remain attractive for illicit use.

Europe moves to tighten controls

The Tokyo speech coincided with regulatory activity across multiple jurisdictions. Bank of France first deputy governor Denis Beau urged the EU to go beyond current MiCA rules by restricting non-euro stablecoins in everyday payments. His call was for a stricter approach than MiCA currently requires. The ECB also compared euro stablecoins and tokenized money market funds, pointing to differences in transparency and liquidity management under stress.

• United Kingdom: The House of Lords questioned Coinbase in March about the risk stablecoins pose to bank deposit funding
• Switzerland: UBS and local banks launched a Swiss franc stablecoin pilot on April 8 in a regulatory sandbox
• The US is approaching a Senate floor vote on stablecoin legislation

Is USDT or USDC at risk right now?

De Cos frames this as a future scenario, not an immediate threat. The stablecoin market is above $316 billion today. That is still a small share of global payments, so systemic risk is not present yet. The concern is velocity. Transaction volumes are growing faster than traditional payment systems, and regulators want rules in place before scale becomes a real issue.

Without shared rules, the risks stay in the system

De Cos is not calling for a ban. His message is that fragmented national approaches let issuers shop for the softest jurisdictions while risks stay in the system. The US, EU and UK are each building their own regimes. That gap is exactly what the BIS wants addressed.