At a seminar in Tokyo on April 20, 2026, Pablo Hernández de Cos, General Manager of the Bank for International Settlements (BIS), put forward a far-reaching qualitative assessment: the world’s largest dollar stablecoins, USDT and USDC, operate more like exchange-traded funds (ETFs) than true currencies. This is not a rhetorical analogy, but a conclusion drawn from three core structural features.
First, stablecoin issuers impose redemption fees or conditions in the primary market, preventing holders from redeeming dollars at face value on demand as they would from a bank account. Second, prices in the secondary market (exchanges) frequently deviate from the $1 peg, with such decoupling especially pronounced during periods of stress. Third, issuers’ reserve assets are primarily composed of short-term government bonds and bank deposits—a portfolio structure highly similar to money market funds. According to BIS, these features collectively create "redemption frictions"—a structural flaw that makes stablecoins more akin to securities than currencies in regulatory classification.
How Structural Flaws in Redemption Mechanisms Can Spark Systemic Risk
BIS’s core concern about stablecoins centers on a clear transmission channel: large-scale redemption pressure triggers the sale of reserve assets, which in turn transmits funding stress to the banking system. This mechanism is fundamentally similar to the logic behind the 2023 Silicon Valley Bank (SVB) run—the only difference is the trigger has shifted from traditional bank deposits to on-chain stablecoins.
When panic hits the market and a large number of holders simultaneously redeem stablecoins, issuers are forced to sell their holdings of short-term government bonds and bank deposits in already stressed markets. This selling not only depresses the prices of those assets, but also creates knock-on effects for banks holding similar assets. Notably, BIS General Manager Hernández de Cos also outlined a risk mitigation path: if stablecoin issuers can access arrangements similar to deposit insurance or central bank lending facilities, such risks could be "substantially reduced."
Why High Market Concentration Amplifies Systemic Importance
As of April 21, 2026, USDT’s market cap stands at approximately $187.26 billion, accounting for 59.81% of all stablecoins; USDC’s market cap is about $78.2 billion, or 24.97%. Together, these two issuers represent about 85% of global stablecoin circulation. This concentration itself constitutes a systemic vulnerability.
BIS argues that when two issuers control the vast majority of global stablecoin supply, their structural flaws become systemic risk exposures rather than isolated product issues. High concentration not only means risk is concentrated, but also that if either issuer faces a redemption crisis, the shock will rapidly spread throughout the financial system via common reserve asset holdings.
What Substantive Challenges Stablecoin Expansion Poses to Monetary Policy Transmission
BIS incorporates the impact of stablecoins on monetary policy into its core risk analysis framework. Hernández de Cos warns that if dollar-denominated stablecoins continue to grow to a scale that rivals traditional currencies, they will have "substantive consequences" for national monetary policy and financial stability.
When users shift from traditional bank deposits to stablecoins, central banks’ liquidity management capabilities face a direct challenge. The more profound impact lies in the risk of "dollarization" in emerging economies. According to International Monetary Fund (IMF) officials, in some emerging markets, dollar stablecoins already account for a "substantial share" of payments, threatening local currency sovereignty. Large-scale migration of funds from local currencies to dollar-pegged stablecoins could weaken central banks’ ability to manage their own economies. Standard Chartered analysts project that the volume of dollar stablecoins held in emerging markets could surge from $173 billion at the end of 2025 to $1.22 trillion by 2028.
Why Divergent Global Stablecoin Regulatory Frameworks Could Severely Fragment Financial Markets
Hernández de Cos explicitly warns that if countries continue to pursue their own approaches to stablecoin regulation, "different regulatory frameworks for stablecoins in different jurisdictions could lead to severe market fragmentation or encourage harmful regulatory arbitrage."
The world’s three major economic blocs are already charting distinct regulatory paths. The European Union’s Markets in Crypto-Assets Regulation (MiCA), set to be fully implemented on June 30, 2026, restricts stablecoin issuance to authorized credit institutions or e-money institutions and imposes strict anti-money laundering and reserve audit requirements. The US GENIUS Act, signed into law in July 2025, establishes a federal licensing framework for payment stablecoins, with the Office of the Comptroller of the Currency (OCC) issuing implementation proposals in February 2026 that further detail reserve standards, redemption obligations, and capital requirements. Meanwhile, the Deputy Governor of the Bank of France has recommended amending MiCA to limit the use of non-euro stablecoins in daily payments, and European countries are actively promoting euro-denominated local stablecoins.
These differences are not merely technical details, but reflect fundamentally different views on the nature of stablecoins—whether to regulate them as payment instruments or as financial products. This distinction determines that businesses operating stablecoins globally will face entirely different compliance costs and operational constraints depending on the jurisdiction.
Why International Coordination Has Stalled and How Regulatory Arbitrage Space Is Created
Last week, Financial Stability Board (FSB) Chair and Bank of England Governor Andrew Bailey warned that progress on developing international standards for stablecoins has slowed over the past year. As global stablecoin supply surpasses $315 billion, the regulatory vacuum is widening.
BIS specifically notes that substantial stablecoin activity on public permissionless blockchains and in non-custodial wallets operates outside traditional anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks. Unless dedicated safeguards are established at fiat on- and off-ramps, these tools will remain vulnerable to illicit use. This blind spot, combined with divergent national regulatory standards, creates structural space for regulatory arbitrage—allowing firms to operate in the most permissive jurisdictions and shift high-risk activities to regulatory havens.
What Potential Solutions Central Banks and Policymakers Are Considering
In response to these risks, BIS and national policymakers have proposed a multi-layered approach. At the micro level, restricting stablecoin interest payments is one option under discussion. Hernández de Cos points out that if holding stablecoins yields no return and comes with higher opportunity costs (such as during periods of high interest rates), the trend of funds shifting from bank deposits to stablecoins may be less pronounced.
At the institutional level, allowing compliant stablecoin issuers to access central bank lending facilities or deposit insurance mechanisms is seen as an effective way to reduce the risk of redemption runs. At the macro level, the international community urgently needs to establish unified stablecoin regulatory standards to eliminate opportunities for regulatory arbitrage. While achieving this goal is extremely challenging in the current geopolitical environment, BIS’s persistent pressure is pushing "global regulatory coordination" to the forefront of the international financial policy agenda.
Conclusion
BIS’s characterization of stablecoins as "ETF-like" is not an academic debate, but a systematic revelation of the potential systemic risks in a $315 billion market. From the structural flaws in redemption mechanisms, to the contagion effects amplified by market concentration, and the risk of financial fragmentation due to divergent regulatory approaches, BIS’s warning chain is clear and logically compelling. For market participants, understanding the evolution of this regulatory logic may be far more valuable in the long term than focusing on short-term price fluctuations.
Frequently Asked Questions (FAQ)
Q1: Why does BIS classify stablecoins as "more like ETFs" rather than currencies?
BIS notes that stablecoin issuers impose redemption fees and restrictions in the primary market, and 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 expected of true currencies. Therefore, BIS believes stablecoins are closer to securities in terms of regulatory classification.
Q2: Why can stablecoin redemption mechanisms trigger systemic risks similar to bank runs?
Stablecoin issuers typically hold short-term government bonds and bank deposits as reserves. When large-scale redemption demands arise, issuers are forced to sell reserve assets in already stressed markets. This not only depresses the prices of those assets, but can also create knock-on effects for banks holding similar assets—much like the 2023 Silicon Valley Bank run, which was triggered by forced sales of depreciated bond assets.
Q3: How large is the current global stablecoin market? What are the respective shares of USDT and USDC?
As of April 21, 2026, USDT’s market cap is approximately $187.26 billion, representing 59.81% of the stablecoin market; USDC’s market cap is about $78.2 billion, or 24.97%. Together, they account for roughly 85% of global stablecoin circulation.
Q4: What are the main differences in stablecoin regulation among countries?
The EU’s MiCA framework restricts stablecoin issuance to authorized credit or e-money institutions and imposes strict reserve and audit requirements. The US GENIUS Act establishes a federal licensing framework, with the OCC regulating payment stablecoin issuers. The two frameworks differ significantly on reserve standards, interest bans, anti-money laundering requirements, and more.
Q5: What risk mitigation solutions has BIS proposed?
BIS General Manager Hernández de Cos suggests that if stablecoin issuers can access arrangements similar to deposit insurance or central bank lending facilities, the market stress risk from redemption runs could be "substantially reduced." Additionally, restricting stablecoin interest payments is being discussed as a policy option to reduce incentives for funds to migrate from bank deposits to stablecoins.
