Key Takeaways:
- BIS General Manager Pablo Hernández de Cos warned April 20 that stablecoins’ $320 billion market poses financial stability and AML risks.
- Tether’s USDT dominates the stablecoin market.
- De Cos called for policymakers to refine frameworks using Project Agorá as a model for integrating tokenization by 2026.
BIS Chief Warns Stablecoin Regulation Gaps Risk Global Financial Fragmentation
Speaking at a Bank of Japan seminar in Tokyo on April 20, de Cos delivered a speech titled “Stablecoins: framing the debate,” where he outlined the structural risks stablecoins pose to credit markets, monetary policy, and financial integrity.
The global stablecoin market stands at approximately $320 billion as of April 20, 2026. That figure is dwarfed by the roughly $8 trillion held in U.S. bank deposits alone, though de Cos noted the market has held up against recent volatility in broader crypto markets.
The BIS boss noted that Tether’s USDT and Circle’s USDC together account for roughly 85% to 98% of the stablecoin supply. Both are pegged to the U.S. dollar, and he explained that approximately 98% of all stablecoins are dollar-denominated.
De Cos remarked that stablecoin transaction volumes reached around $35 trillion in 2025, but real-economy use was far more limited. Payment-related flows over the same period were estimated at approximately $390 billion, a fraction of what moves through traditional payment systems each year.
“These challenges require progress along two dimensions,” de Cos said. “First, it is important to explore technological solutions and regulatory approaches to mitigate the risks posed by current stablecoin arrangements.”
He added that international cooperation is central to any path forward. The BIS General Manager continued:
“Without it, divergent regulatory frameworks for stablecoins across jurisdictions could lead to severe market fragmentation or enable harmful regulatory arbitrage.”
De Cos evaluated stablecoins against two core requirements for functional money: singleness and interoperability. He found stablecoins fall short on both. Unlike bank transfers, stablecoin transactions do not settle on a central bank’s balance sheet, which leaves open the risk of price deviations from par, especially under stress. Fragmentation across public blockchains, such as USDC operating separately on Ethereum and Solana, compounds interoperability problems.
He flagged financial integrity as the most pressing concern. Stablecoins circulating on permissionless blockchains with unhosted wallets largely operate outside regulatory perimeters and without know-your-customer (KYC) checks, he said, limiting the effectiveness of anti-money laundering (AML) and counter-terrorism financing efforts.
Chainalysis data cited in the BIS speech found that stablecoins reportedly account for most illicit transactions within the crypto ecosystem. On the monetary policy side, de Cos warned that dollar-pegged stablecoins already function as a parallel store of value in emerging market and developing economies.
Wider adoption, he stressed, could weaken domestic monetary transmission, make capital flows more volatile, and enable evasion of capital controls. Japan received a positive mention for its early regulatory approach. Amendments to Japan’s Payment Services Act in 2022 became a model that other jurisdictions have since referenced.
Despite that framework, yen-pegged stablecoins hold less than 0.01 percent of the market capitalization of dollar-pegged coins, illustrating the limits of domestic regulation alone.
In the speech, De Cos pointed to the BIS Unified Ledger vision and Project Agorá, a collaborative initiative with the Bank of Japan focused on improving cross-border payments through tokenization, as constructive models for integrating private innovation within the existing two-tier financial system.
He closed by reaffirming that the monetary anchor provided by central banks remains indispensable, regardless of how stablecoin arrangements evolve.