BIS Says Stablecoins Fall Short of Money, Are Closer to ETFs

The Bank for International Settlements said stablecoins still do not meet the core requirements of money and are more akin to exchange-traded funds.

In its 2026 annual report, cited by The Block on June 28, the BIS said stablecoins fall short on key attributes of money including singleness, elasticity, interoperability and integrity.

Stablecoins can deviate from their pegs in secondary markets and face friction in the redemption process, the report said. As a result, they are more similar to ETFs than to payment instruments.

The BIS estimated the stablecoin market at about $320 billion as of the end of May. More than 99% of fiat-backed stablecoins are pegged to the dollar, with Tether's USDT and Circle's USDC accounting for most of the market.

The report said that even if stablecoins grow significantly, their net effect on the economy would likely be limited. In scenarios where issuance expands to $1 trillion to $3 trillion, higher bank funding costs and weaker lending offset any increase in governments' fiscal capacity, leaving economic growth slightly weaker overall.

The BIS also said stablecoins are widely used in illicit finance because their circulation on public blockchains weakens anti-money laundering and know-your-customer controls.

It added that broader holdings of dollar-based stablecoins in emerging markets could lead to "stablecoin dollarization," weakening capital flows management and monetary sovereignty.

As an alternative, the BIS proposed a "Unified Ledger" model that would bring tokenization into the existing financial system with central banks and commercial banks participating. The model would combine central bank reserves, commercial bank deposits and regulated private money on a single ledger, using central bank money as the anchor.