A report from the Bank for International Settlements (BIS) critiques stablecoins, asserting they cannot function as real money in today’s financial system. The BIS identifies three key criteria—singleness, elasticity, and integrity—that stablecoins fail to meet. It describes them primarily as digital bearer instruments that resemble assets more than true monetary forms. Unlike central bank-backed money, stablecoins trade at fluctuating rates, undermining monetary singleness. Moreover, the report emphasizes stablecoins' inability to absorb economic shocks due to their 'cash-in-advance' nature, contrasting sharply with modern banking's liquidity provisions. The integrity of stablecoin mechanisms is also questioned, with vulnerabilities to financial crime like money laundering and sanctions evasion noted. Despite the BIS acknowledging the growing demand for stablecoins owing to lower transaction costs, it recommends a limited, well-regulated role for these instruments. The report also recognizes tokenization as a transformative innovation for finance. Reaction from the crypto community included skepticism over the BIS's stance, emphasizing its regulatory background. Following the report, Circle's stock faced a significant decline, reflecting market concerns about stablecoin viability.

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