BIS called stablecoins "unreliable money"

Stablecoins do not meet the three key criteria: "unity", "elasticity", and "integrity". This is stated in the report of the Bank for International Settlements (BIS).

In BIS, such assets are referred to as "digital bearer instruments," which are more similar to financial assets. Unlike central bank money, "stablecoins" are issued by private companies, and their value can fluctuate. This violates the principle of "unity of money."

The second criterion is "elasticity". The BIS noted that full prepayment from holders is required for the issuance of new stablecoins. This is an inflexible scheme that does not allow for cushioning shocks and meeting demand for large payments. Central bank systems can provide liquidity as needed.

The BIS believes that the structure of stablecoins makes them vulnerable to financial crimes, violating the third principle of "integrity." This is especially true for transactions through non-custodial wallets on public blockchains. In the report, they linked them to money laundering, sanction evasion, and terrorist financing.

BIS recognized the demand for stablecoins due to their availability for cross-border transfers and low fees. However, the regulator believes that their role should be limited and clearly regulated.

Despite the criticism, the report highly praised tokenization. In BIS, it was called a "transformational innovation" that will complement rather than replace the existing financial system.

Representatives of the crypto community stated that the negative assessment came as no surprise. They reminded that BIS is a "regulatory body belonging to the world's central banks."

The chief economist of Aletheia Capital, Jim Walker, called the BIS's position "hysterical" and questioned the reliability of the central banks themselves, pointing to their historical failures.

Let us remind you that experts warned about a bubble in the stablecoin market. They believe that Circle's successful listing will trigger a wave of IPOs from imitation companies.