BIS Puts Stablecoins in the Same Bucket as ETF-Like Payment Tools

The central banking organization says fiat-backed tokens often trade above or below par and are not always directly redeemable for cash. It also warns that dollarization risks could pressure local currencies.

Key Takeaways

• The BIS says stablecoins, in practice, act more like ETFs than like fully fledged money.
• According to the BIS, stablecoins do not always trade at par, and cash redemptions are not always immediate or guaranteed.
• The BIS warns that dollar-pegged stablecoins could accelerate dollarization and make cross-border oversight more difficult.

The Bank for International Settlements (BIS) is pushing back on the idea that stablecoins are the same as money in its latest annual report. In the central banking group’s view, fiat-linked tokens behave more like ETFs or other investment products in day-to-day use than like a true payment instrument.

Why the BIS Is Skeptical

At the center of the BIS’s argument is a simple point: money is supposed to be accepted at face value, but stablecoins do not always work that way. The report says tokenized fiat assets often trade a little above or below par in secondary markets, much like ETFs can move away from their net asset value.

The BIS also says redemption is not always as clean as many users expect. Someone trying to turn a stablecoin into cash may not receive par value right away, or with certainty, while ETFs can face similar friction because of fees or delays built into the fund structure.

The report adds that stablecoin transfers are not settled directly or indirectly on central bank balance sheets. As a result, the BIS says there is no guarantee under every condition that different issuers and blockchains can always be redeemed at par.

Dollarization Through Stablecoins

The BIS’s warning is not limited to whether stablecoins resemble money. It also points to a growing flow of non-dollar currencies into dollar-pegged stablecoins, which the organization says could speed up dollarization. The BIS has already flagged the potential risks to financial stability and monetary sovereignty, especially in emerging markets.

In the report’s view, that trend could add pressure to local currency spot markets and widen the divide between crypto markets and traditional FX markets. The BIS describes it as a faster form of deposit dollarization, where households move into foreign currencies during periods of high inflation or government stress. Once that behavior becomes entrenched, the bank says it can last for years.

What This Means for Europe

For European crypto readers, the issue matters because stablecoins are increasingly being discussed as the plumbing behind payments, trading, and settlement. If an institution like the BIS places them firmly in the same category as ETFs, that could intensify the debate over regulation, reserve quality, and redeemability.

That conversation is already showing up in the market. For instance, firms like Invesco are building tokenized funds for stablecoin reserves, which shows how thin the line has become between payment infrastructure and investment products.

The BIS also says it is difficult to police cross-border stablecoin use because of the digital, bearer-like design of tokens and the role of unhosted wallets. That is why stablecoins are not just a market story for regulators, but also a broader question about oversight, capital flows, and the financial system’s infrastructure.