The Bank for International Settlements (BIS) has issued a stark warning against the growing reliance on stablecoins, arguing that they fall short of functioning as legitimate money within a modern financial system.
In its 2025 Annual Economic Report, released June 24, the BIS criticized stablecoins for failing to meet three essential criteria of effective money: singleness, elasticity, and integrity. The institution described these digital assets as “digital bearer instruments” that behave more like tradable financial assets than stable, widely accepted currencies.
The BIS outlined that, unlike central bank-issued money, which is universally accepted at face value and doesn’t require identity checks, stablecoins are privately issued and often fluctuate in value. This undermines the principle of “singleness,” which demands that money maintains the same value across all uses and transactions.
Elasticity, the second benchmark, also emerged as a major weakness. The report criticized the rigid supply mechanics of stablecoins, noting that any increase in their circulation depends entirely on users providing full payment upfront. This “cash-in-advance” requirement, the BIS argued, restricts the kind of responsive liquidity that central banks provide during financial shocks or large-value transactions.
Despite these criticisms, the BIS acknowledged that demand for stablecoins persists, mainly because of their utility in cross-border transactions and lower fees. Still, the report recommended that their use be strictly limited and subject to robust regulatory oversight.
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The stablecoin market has grown, but usage remains concentrated
The global stablecoin market was worth around $320 billion at the end of May 2026, with the market heavily concentrated in US dollar-pegged assets. Tether’s USDT and Circle’s USDC remain the dominant players, while other major stablecoins include USDS, USDE and USD1.
But the BIS argues that market size alone does not demonstrate that stablecoins have become widely used as money.
According to the 2026 report, stablecoins are still used mainly for crypto trading. They have also gained some traction as offshore stores of value in emerging and developing economies where people face currency instability.
The BIS estimated that stablecoins processed around $28 trillion in transactions during 2025. However, it noted that this figure includes substantial activity within the crypto ecosystem and transactions between wallets controlled by the same party. Once such activity is excluded, the volume associated with genuine economic payments is considerably smaller.
That distinction has become increasingly important as stablecoin issuers and the crypto industry have promoted the tokens as an alternative payment infrastructure.
There is optimism for tokenization
While stablecoins took a beating in the report, the BIS expressed optimism about another blockchain-based development which is tokenization. The institution praised tokenized finance as a “transformative innovation” that enhances, rather than disrupts, the existing financial system.
Meanwhile, according to a June 2024 report by the BIS, the likelihood of central banks issuing a wholesale CBDC now surpasses the chances of them releasing a retail one.
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