BIS General Manager Hernández de Cos rejects stablecoins as scalable payment money
A BIS-linked study also finds stablecoin issuer rules still diverge sharply across five major jurisdictions.
BIS General Manager Pablo Hernández de Cos said on Aug. 29 that stablecoins “do not credibly function as a means of payment at scale,” and argued tokenized bank deposits are the more durable path for tokenized payments. His remarks landed alongside a new BIS-linked comparison of stablecoin issuer rules across the US, EU, UK, Hong Kong, and Singapore that found major differences in who can issue and what issuers are allowed to do.
BIS Renews Its Case Against Stablecoins as Everyday Payment Money
The Bank for International Settlements is reasserting a familiar line with fresh urgency: stablecoins may be useful, but they are not a credible candidate for mainstream payments at scale. BIS General Manager Pablo Hernández de Cos said stablecoins “do not credibly function as a means of payment at scale,” and positioned tokenized bank deposits as the preferred route for bringing tokenization into payments without breaking the existing monetary architecture.
“Tokenised deposits offer a more direct path to harness tokenisation while preserving the monetary system’s foundations,” Hernández de Cos said. The framing matters for traders because it treats stablecoins less like a niche crypto product and more like a systemic payments question, the kind that tends to pull in central banks, finance ministries, and bank supervisors rather than just market conduct regulators.
Hernández de Cos’ profile also adds weight to the signal. He has been described as a candidate to succeed European Central Bank President Christine Lagarde next year, which makes his public positioning on stablecoins and tokenized deposits harder to dismiss as abstract BIS theorizing.
The Risk Channels BIS Is Pointing To: Bank Funding, AML Friction, and Offshore USD Spillovers
The BIS critique is not just philosophical. Hernández de Cos laid out concrete channels policymakers can act on, starting with bank funding. He said stablecoins could lower government borrowing costs, but warned that the consumer impact could run the other way if deposits migrate out of banks and into stablecoins.
The mechanism he pointed to is straightforward: if customers move bank deposits into stablecoins, banks may need to replace that funding with more expensive sources, and those higher funding costs can be passed through to households and businesses via higher borrowing rates. The packet does not quantify the size of that effect, and Hernández de Cos described it as a tradeoff that could “cut both ways,” leaving open how large the net impact would be in practice.
He also emphasized operational and compliance friction that tends to get glossed over in payments narratives. Hernández de Cos cited limited interoperability between stablecoin platforms, and difficulties applying anti-money laundering controls consistently across stablecoin systems, two constraints that become more binding as usage moves from crypto-native rails into broader commerce.
The sovereignty point is the one most likely to travel across jurisdictions. Hernández de Cos warned that growing use of US dollar-pegged stablecoins outside the United States could undermine monetary sovereignty and weaken domestic monetary policy in other countries, a framing that has historically been a fast track to tighter rules, especially where local currency substitution is already politically sensitive.
FSI’s Five-Jurisdiction Map Shows Issuer Rules Are Still Fragmented
A new study from the BIS-linked Financial Stability Institute, published Aug. 28, put structure around the regulatory reality stablecoin issuers already navigate: the rules are not converging cleanly, and the differences are material to business models. The FSI compared stablecoin regulations in the United States, European Union, United Kingdom, Hong Kong, and Singapore, and found substantial variation in which entities may issue stablecoins and what other business activities issuers can conduct.
On issuer eligibility and scope, the study characterized the US and Singapore as relatively restrictive toward non-bank stablecoin issuers. In the US, the GENIUS Act framework described in the packet generally places lending, staking, proprietary trading, and custody of third-party crypto assets outside the activities permitted for payment stablecoin issuers, tightening the perimeter around what an issuer can do inside the same regulated entity.
Hong Kong, the UK, and the EU were described as less restrictive in comparison, allowing some additional activities when paired with separate authorization, regulatory consent, or other applicable permissions. That sounds permissive, but it also implies a more procedural path where product expansion becomes a licensing and approvals problem rather than a pure commercial decision.
The most actionable structural detail in the FSI comparison is how restrictions are applied. Across all five jurisdictions, the study found that limits generally attach to the issuing entity rather than the wider corporate group, meaning other group members can conduct activities that the stablecoin issuer itself cannot. That creates a clear incentive for multi-entity structures where the issuer is ring-fenced, while adjacent affiliates handle restricted lines like trading, lending, or custody, subject to whatever separate permissions apply.
My Take: Fragmented Rules Keep Stablecoins in a Policy Crosshair—Even as Usage Grows
The BIS comments are being read as another round of stablecoin skepticism, but the more market-relevant detail is the pairing with the FSI’s jurisdiction map. Hernández de Cos is arguing stablecoins fail as payments at scale and elevating tokenized bank deposits as the “preserve the foundations” alternative, and the study effectively explains how regulators can enforce that preference without banning stablecoins outright, by narrowing issuer activities and forcing corporate separation.
The threshold that matters is whether major jurisdictions start echoing the offshore USD sovereignty framing and then translate it into enforceable issuer constraints, because that is what pushes stablecoins from a growth narrative into a compliance-and-structure tradeoff that reshapes who can issue, how they partner, and what revenue lines sit inside the regulated perimeter.
