BIS (Bank for International Settlements) Director General Pablo Hernández de Cos warned on Monday at a conference in Japan hosted by the Bank of Japan that the global stablecoin market has surpassed $315.9 billion, but its operating mechanism is closer to investment products such as ETFs rather than genuine money. BIS said that once large-scale redemptions occur, it will trigger a chain-run effect similar to the one seen in 2023 at Silicon Valley Bank.
Highly concentrated market: USDT and USDC control 85% of the share
The stablecoin market structure is highly concentrated, with Tether (USDT) and Circle (USDC) together accounting for about 85% of circulating market share. USDT has a market value of about $186.0 billion, while USDC is about $78.8 billion. Pablo Hernández de Cos believes that this level of concentration reflects systemic importance and also highlights structural flaws in the way existing stablecoin arrangements function as payment instruments. While stablecoins offer advantages such as fast cross-border transfers and the ability to integrate with smart contracts, without an effective international regulatory framework, they will have a major impact on financial stability and monetary policy.
Redemption flaws and financial contagion risk: a run mechanism like SVB
The “redemption frictions” of stablecoins are the core risk point that BIS is most concerned about. In the primary market, issuers often set redemption fees or impose limiting conditions, and secondary-market prices frequently deviate from the $1 peg. As a result, during periods of stress, stablecoins cannot remain as stable as traditional fiat currencies. Once the market sees large-scale withdrawals, issuers are forced to sell reserve assets in an already pressured market. This not only transmits funding pressure into the banking system, but may also depress the prices of related assets, triggering chain effects on banks holding similar assets. To mitigate such risks, some policymakers are considering limiting interest paid on stablecoin holdings, or allowing regulated issuers to access central bank lending facilities or mechanisms similar to deposit insurance.
Fragmented regulation and loopholes for illegal financing
Regulatory progress worldwide is uneven. FSB Chair and Bank of England Governor Andrew Bailey said that the international rulemaking process has stalled. The U.S. “CLARITY Act” is currently under consideration in the Senate. While the issue of stablecoin yields has partially reached compromise, there are still disagreements over DeFi regulation and professional ethics standards. BIS specifically noted that stablecoin usage relies on non-custodial wallets and public blockchains, with a large share of activity lying outside traditional AML and CTF monitoring. Unless specialized safeguards are implemented in on-off ramps, it is easy for stablecoins to become tools for the flow of illicit funds.
European countries step up countermeasures against dollar stablecoins, fueling a battle over the fiat map
Against a backdrop of tightening regulation, European countries are actively adjusting their strategies. French Finance Minister Roland Lescure urged Europe’s banking sector to expand the issuance of euro-denominated stablecoins, and Denis Beau, Deputy Governor of the Banque de France, suggested revising MiCA rules to restrict the use of non-euro stablecoins in everyday payments. UBS launched a Swiss franc stablecoin pilot in early April 2026. Demand is also continuing to grow—according to a BVNK survey, among 15 countries, 54% of respondents held stablecoins in the past year, and 56% plan to increase their holdings. For some freelancers and e-commerce sellers, stablecoin payments have accounted for 35% of their annual revenue.
Frequently Asked Questions
Why does BIS say stablecoins are more like securities than money?
BIS pointed out that stablecoin issuers set redemption fees and impose limiting conditions in the primary market, and that secondary-market prices frequently deviate from the $1 peg. These features align more with the behavior of ETFs or investment products than with the unconditional convertibility that genuine money should have. Therefore, BIS believes they are more akin to securities in terms of regulatory classification.
Why can stablecoin redemption mechanisms create systemic risks similar to bank runs?
Stablecoin issuers typically hold short-term government bonds and bank deposits as reserves. Once large-scale redemption demand arises, issuers are forced to sell reserves in markets that are already under pressure. This not only pushes down the prices of related assets, but may also have ripple effects on banks holding similar assets—similar to the runs triggered in 2023 at Silicon Valley Bank, when bond asset losses forced it to sell.
What are the latest developments in global stablecoin regulation right now?
Regulatory progress is uneven: the U.S. “CLARITY Act” is still pending in the Senate, and there are disagreements over DeFi provisions; Europe’s MiCA framework faces pressure for revisions to limit non-euro stablecoins; the Bank of England’s governor said that international rulemaking has fallen into a stalemate; Swiss UBS has launched a fiat stablecoin pilot; China continues its ban on offshore yuan stablecoins, but Circle CEO predicts China may launch related products within 3 to 5 years.
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