BIS warns on US-led stablecoin push risks regulatory arbitrage and capital control evasion

Speaking in Tokyo, Pablo Hernández de Cos, BIS's General Manager warns that the US-led stablecoin push risks regulatory arbitrage and capital control evasion. He renewed the call for global coordination on stablecoins, arguing it is essential to avoid severe fragmentation in financial markets.

De Cos cautioned that, without alignment, stablecoins could:

- Undermine monetary and fiscal policy transmission

- Introduce systemic stress into financial markets

- Weaken controls against illicit financial flows

He emphasized that international coordination is now of “critical importance.”

➡️ Why this matters

The BIS has historically set the tone for global prudential standards, from liquidity rules to capital frameworks. But on stablecoins and crypto, its influence is now being actively challenged by US regulators.

- The Basel Committee on Banking Supervision has already flagged that permissionless blockchains introduce heightened operational, governance, and compliance risks (Working Paper 44, 2024). More here: https://lnkd.in/e7us8pvN

- Those risks were codified into Basel’s SCO60 framework, which assigns materially higher capital charges to exposures involving permissionless infrastructure.

- However, US regulators including the Office of the Comptroller of the Currency have pushed back, issuing statement that tokenized securities receive identical capital treatment regardless of whether they are issued on permissioned or permissionless blockchains. More here: https://lnkd.in/e5J6CWSC

👉 This is the fault line: A divergence is emerging between risk-weighted prudential conservatism BIS/Basel and USD dominance and TBill funding benefit focused US approach.

The divegence in "regulatory frameworks for stablecoins across jurisdictions could ⁠lead to severe market fragmentation or enable harmful regulatory arbitrage," de Cos warned.

➡️ Bottom line

The question about stablecoins is no longer a technical debate about payment efficiency on the global stage. It is a geopolitical contest over who defines the rules of digital money and how capital flows are governed in a tokenized financial system.

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