The Bank for International Settlements (BIS) has issued a blunt warning that the fast-growing stablecoin market could undermine core pillars of the global monetary system—particularly sovereign control and the ability of banks to fund lending to the real economy. In its Annual Economic Report, published Sunday, the Basel-based institution assessed the stablecoin sector at roughly $316 billion and argued that most tokens pegged to fiat currencies do not have the institutional features needed to function as safe, reliable money at scale.

Rather than dismissing tokenization altogether, BIS said policymakers should push toward “tokenized” versions of central bank and commercial bank money on regulated infrastructures. The report also expands BIS’s critique of public, permissionless blockchains—arguing that the economic incentives and governance gaps in decentralized networks make them a poor fit for systemically important financial infrastructure.

Key takeaways

• BIS warns that stablecoin growth could fragment the monetary system and weaken central banks’ ability to control money and credit.
• The BIS report argues that fiat-pegged stablecoins lack the institutional design needed to operate as reliable money at the scale financial systems require.
• Tokenized central bank money and tokenized commercial bank deposits on regulated platforms are presented as a more robust alternative.
• BIS points to “stablecoin dollarization” as a risk factor for monetary sovereignty and bank intermediation, especially in emerging markets.
• The report renews BIS’s stance that permissionless public blockchains face structural hurdles tied to settlement economics and accountability.

Stablecoins, monetary sovereignty, and the bank funding question

In its assessment of stablecoins, BIS focused on what it sees as structural vulnerabilities in how reserve assets underpin many tokens. The report argues that stablecoins pegged to fiat currencies may not provide the same institutional safeguards expected of money used throughout payments and finance.

More broadly, BIS said that a meaningful shift by holders away from commercial bank deposits and into private digital tokens could reduce banks’ funding base. In BIS’s framing, that contraction could constrain banks’ capacity to extend credit to the real economy—an issue that connects stablecoin adoption not just to payments, but to financial intermediation and credit creation.

Equally important for central banks, BIS said the current regulatory approach may not be sufficient if private digital currencies continue to expand. The report’s policy signal is that stablecoins should not be treated as the foundation of the future monetary system without addressing the risks to monetary stability and sovereign control.

The “stablecoin dollarization” risk

BIS also highlighted a trend it calls “stablecoin dollarization”: the growing use of dollar-denominated stablecoins in countries with weaker domestic currencies. According to BIS, this pattern can impair monetary sovereignty and reduce the effectiveness of local monetary policy.

The BIS report further links stablecoin dollarization to weaker bank intermediation and greater exposure to volatile cross-border capital flows. BIS’s concern is that when dollar-linked tokens become an increasingly common store of value and medium of exchange, domestic policy tools can become less effective—particularly in emerging market economies where financial systems may already face constraints.

For market participants, the implication is that stablecoin growth does not occur in a policy vacuum. Adoption in jurisdictions with currency stress can change the transmission of monetary policy, alter deposit dynamics, and potentially amplify external shocks.

BIS presses for “unified ledger” tokenization

While BIS critiqued stablecoins as they currently operate, it did not reject the underlying idea of tokenization. Instead, the report advocates a “unified ledger” architecture that brings tokenized central bank money, tokenized commercial bank deposits, and tokenized financial assets together on programmable platforms—within regulated legal and institutional frameworks.

BIS’s underlying argument is that tokenization can deliver practical benefits—such as programmable transactions and faster settlement—without giving up the institutional foundations that, in its view, are necessary for financial integrity, public trust, and system-level stability.

This is also where BIS’s recommendations differ from the most common public narrative around stablecoins. Rather than emphasizing private tokens as the endpoint, BIS is effectively calling for tokenized money to remain anchored in the regulated institutions that already underpin payments, liquidity, and compliance in traditional finance.

For investors and builders, the “unified ledger” approach suggests a direction of travel: interoperability and programmability, yes—but paired with clearer governance, defined responsibilities, and institutional accountability.

Why BIS says permissionless public chains struggle with institutional finance

BIS’s report includes one of its strongest critiques yet of permissionless public blockchains such as Bitcoin and Ethereum as a foundation for the monetary system. The BIS position is that decentralized networks relying on distributed validation and lacking a central governance structure struggle to meet expectations for scalability, legal accountability, and settlement finality—qualities BIS argues are required for systemically important financial infrastructure.

A central part of BIS’s technical-economic reasoning is that decentralized consensus mechanisms tend to rely on incentives through transaction fees. In BIS’s description, these fee dynamics rise as network activity increases, which can make congestion, longer confirmation times, and higher costs inherent traits rather than solvable short-term bugs.

BIS also argues that permissionless networks do not provide the governance and accountability frameworks institutional finance requires. Without an identifiable entity responsible for maintaining integrity, resolving disputes, or ensuring compliance with financial integrity standards, BIS contends these networks face major obstacles to supporting large-scale regulated financial activity.

Importantly, BIS does not frame tokenization as a substitute for governance. Its emphasis is that programmable financial infrastructure must be paired with enforceable responsibility structures if it is meant to support money-like functions at systemic scale.

What to watch next

For policymakers and market participants, BIS’s report raises the question of whether stablecoin regulation will evolve toward tokenized forms of central bank and commercial bank money on regulated rails. The key uncertainty now is how quickly regulators and financial institutions will translate BIS’s “unified ledger” vision into practical standards—and how adoption of private stablecoins could respond in the meantime.

The Bank for International Settlements (BIS) has issued a warning that the fast-growing stablecoin market could destabilize the global monetary system—particularly by eroding central bank control and by pulling value away from bank deposits. In its Annual Economic Report published Sunday, the Basel-based institution says the scale of stablecoins has reached roughly $316 billion, and it argues that fiat-pegged tokens are not equipped with the institutional safeguards needed to function as “safe, reliable money” at system-wide levels.

Instead, BIS urges central banks and the broader financial sector to accelerate development of tokenized forms of central bank and commercial bank money on regulated infrastructures. The BIS message is not only a critique of today’s stablecoin structure, but also a policy signal that existing regulatory approaches may fall short as private digital currencies continue to expand.

Key takeaways

• BIS estimates the stablecoin market at about $316 billion and warns that its current design lacks features needed for large-scale “safe money.”
• Stablecoin growth could weaken banks and credit creation by enabling deposit migration into private digital tokens.
• BIS flags “stablecoin dollarization” as a risk to monetary sovereignty and domestic policy effectiveness, especially in emerging markets.
• Permissionless public chains face limits, in BIS’s view, due to scalability, legal accountability, and settlement finality requirements for systemic finance.
• BIS supports tokenization inside a regulated “unified ledger” model, combining tokenized central bank money and tokenized deposits.

Why BIS thinks stablecoins could strain the monetary system

In its report, BIS focuses on structural weaknesses it believes are inherent to stablecoins pegged to fiat currencies. The institution argues that these tokens do not carry the institutional features required to operate as trustworthy money at scale. A central part of BIS’s concern relates to how reserve assets are managed and governed.

BIS also highlights a potential macro-financial channel: if users shift value from commercial bank deposits into private digital tokens, banks could face reduced funding. In turn, that could constrain the credit banks provide to the real economy. The report frames this as a material risk created by stablecoins’ ability to transfer purchasing power outside the traditional deposit-based plumbing of the banking system.

For policymakers, BIS’s warning reads as a call for faster work on safer alternatives. Rather than aiming to position stablecoins as a lasting foundation for the monetary system, BIS says the more robust path is tokenized central bank and commercial bank money—supported by regulated infrastructures that preserve monetary stability and financial integrity.

Dollar-denominated stablecoins and the threat to sovereignty

BIS devotes particular attention to a trend it calls “stablecoin dollarization”—the increasing use of dollar-denominated stablecoins in jurisdictions with weaker domestic currencies. According to BIS, this pattern can have several second-order effects for countries that increasingly rely on external currency-linked digital products.

The report argues that stablecoin dollarization may undermine monetary sovereignty and reduce the effectiveness of domestic monetary policy. It also suggests the trend could decrease bank intermediation and heighten exposure to volatile cross-border capital flows, risks that BIS says are especially pronounced in emerging market economies.

For traders and market participants, this matters because stablecoin usage is not just a crypto-native phenomenon; it can reshape liquidity dynamics in foreign exchange-related channels by tying dollar value transfer more directly into the digital asset ecosystem.

BIS challenges permissionless networks as core monetary infrastructure

BIS goes beyond stablecoins themselves and delivers a sharply worded critique of the suitability of public permissionless blockchains—such as Bitcoin and Ethereum—as foundational layers for the monetary system. The report argues that decentralized networks that rely on distributed validation and lack central governance struggle to meet requirements that BIS believes systemically important financial infrastructure must satisfy, including scalability, legal accountability, and settlement finality.

A key part of BIS’s argument is that congestion and rising costs are not merely temporary bugs in permissionless systems, but rather are tied to their underlying economics. BIS contends that compensation for validators via transaction fees tends to increase with network activity, which can make congestion, slower confirmations, and higher costs persistent characteristics rather than solvable engineering limitations.

Just as importantly, BIS says permissionless networks generally lack the governance and accountability frameworks that institutional finance relies on. Without a clearly identifiable entity responsible for maintaining integrity, resolving disputes, or ensuring compliance with financial integrity standards, BIS argues that permissionless blockchains face major obstacles to supporting large-scale regulated financial activity.

Crucially, BIS is not rejecting tokenization outright. Instead, the BIS report argues for a different architecture—one where tokenized money and assets can be programmed for modern settlement benefits while remaining embedded in regulated, accountable institutional frameworks.

The “unified ledger” alternative BIS says can preserve stability

Rather than positioning tokenized assets to replace existing money mechanics, BIS proposes what it describes as a “unified ledger” approach. Under this model, tokenized central bank money, tokenized commercial bank deposits, and tokenized financial assets would be brought together on programmable platforms—within regulated legal and institutional boundaries.

In BIS’s framing, the objective is to keep the advantages that tokenization can bring—such as programmable transactions and faster settlement—while avoiding what it sees as the institutional risks associated with private fiat-pegged tokens operating outside traditional monetary controls.

This direction also signals an important policy tension: as private stablecoins expand, BIS suggests regulators and central banks may need to treat tokenized bank and central bank money as the more durable pathway for digital payments and settlement, not only a technological evolution but a governance one.

Going forward, investors, payment companies, and policymakers will likely watch whether jurisdictions move quickly toward regulated tokenized money pilots and whether new rules meaningfully address deposit-funding risks and dollarization dynamics—areas BIS singled out as central to its concerns.

TLDR:

• Coinbase introduced AI agent tools that connect autonomous software directly to crypto financial services.
• Agent financial accounts enable AI wallets, payments, and low-cost blockchain transactions through Base.
• Coinbase plans an Everything Exchange covering crypto, stocks, commodities, and tokenized assets.
• Payment upgrades include stablecoin rails, Coinbase One Card improvements, and direct deposit expansion.

Coinbase has expanded its artificial intelligence strategy with a new suite of products designed for autonomous software agents. In the last system update the company unveiled developer tool, AI-powered financial services, and crypto-native accounts. 

The announcement also stated plans for a wider trading infrastructure expansion, beyond digital assets. The new offerings reflect Coinbase’s push to combine blockchain technology with AI-powered applications.

Coinbase Launches AI Financial Tools for the Intelligence Age

Coinbase CEO Brian Armstrong described the company’s latest vision by positioning Coinbase as a financial platform for the intelligence age. The announcement accompanied a product presentation focused on AI agents and crypto infrastructure.

According to Coinbase’s system update, the company introduced Coinbase for Agents. The developer toolkit allows creators to connect AI agents directly to existing Coinbase accounts for blockchain-based financial activity.

The company also revealed Coinbase Advisor. The feature brings AI-powered financial and investment assistance directly into the Coinbase application, allowing users to interact with digital financial guidance inside the platform.

Armstrong also presented agent financial accounts built on Base, MCP, and the x402 payment standard. According to the presentation, these accounts enable AI agents to hold wallets, process payments, access digital services, and complete transactions for less than one cent.

Coinbase Expands Trading Infrastructure Beyond Crypto Markets

Beyond artificial intelligence, Coinbase introduced its vision for an Everything Exchange. According to the company’s presentation, the platform aims to combine multiple asset classes within a unified global marketplace.

The proposed exchange includes tokenized equities, traditional stocks, commodities, and pre-IPO perpetual products. Coinbase said the goal is to provide unified liquidity across different financial markets through one trading platform.

The company also announced several payment improvements. These include updates to the Coinbase One Card, broader stablecoin payment rails, and expanded direct deposit capabilities for users.

Armstrong concluded the presentation by highlighting the growing role of AI agents in digital finance. The company stated that programmable intelligence paired with programmable money forms the foundation of its long-term product strategy as blockchain infrastructure continues to evolve.

CZ told CoinDesk over the course of two interviews that he saw multiple causes for crypto’s 2026 bear market including investors moving funds to AI, geopolitical events and the usual four-year crypto market cycle.

He laid out his goals for Binance.US — the U.S. crypto exchange he majority owns but does not run on a daily basis — saying he wanted to see the platform tap Binance Global — the global crypto exchange he majority owns but does not run — for its liquidity, as part of a broader push to make the U.S. market stronger.

And while he said his goal in Washington, D.C. was to clear up any “misunderstandings” about himself and Binance, he said that his pleading guilty to Bank Secrecy Act violations did not hurt his reputation.

Still, CZ told CoinDesk he does not want to run a crypto exchange again, saying he preferred to operate more as an informal adviser to the various companies he’s invested in.

Read more in CoinDesk.

There’s still no real word on where this bill is. As a reminder, the ethics provision remains the biggest hurdle to an agreement. Politico profiled White House crypto liaison Patrick Witt, confirming that any deal he helps broker will need presidential sign-off.

The Bank for International Settlements (BIS) warned that the rapid expansion of stablecoins risks fragmenting the global monetary system and weakening sovereign monetary control, urging central banks and the financial industry to accelerate the development of tokenized forms of central bank and commercial bank money as a safer alternative.

In its Annual Economic Report published Sunday, the Basel-based institution delivered a sharp assessment of the approximately $316 billion stablecoin market, arguing that tokens pegged to fiat currencies lack the institutional features required to serve as safe, reliable money at scale.

BIS pointed to structural vulnerabilities in reserve asset management and warned that a significant migration from commercial bank deposits into private digital tokens could reduce bank funding and constrain credit to the real economy.

The report also provides a signal to policymakers that the current regulatory approach to stablecoins may prove insufficient if private digital currencies continue expanding. Rather than positioning stablecoins as a durable foundation for the future monetary system, BIS said that tokenized commercial bank deposits, combined with tokenized central bank money operating on regulated infrastructures, offer a more robust path toward modernizing payments while preserving monetary stability.

Demand for foreign stablecoins connects FX markets with crypto ecosystem. Source: BIS Annual Economic Report 2026.

The report focuses particular attention on “stablecoin dollarization,” that is, the growing use of dollar-denominated stablecoins in economies with weaker domestic currencies. According to BIS, this trend could weaken monetary sovereignty, erode the effectiveness of domestic monetary policy, reduce bank intermediation and increase exposure to volatile cross-border capital flows, particularly in emerging market economies.

Related: BIS Project Agorá shows tokenized payments can settle in seconds

BIS raises fresh concerns about public blockchains’ limits

The report also delivers one of BIS’s strongest critiques yet of public permissionless blockchains such as Bitcoin and Ethereum as a foundation for the monetary system. It argues that decentralized networks relying on distributed validation and lacking a central governance structure struggle to meet the requirements for scalability, legal accountability and settlement finality expected of systemically important financial infrastructure.

BIS raises concerns on rising fragmentation across layer 1 and layer 2 networks.
Source: BIS Annual Economic Report 2026.

At the center of BIS’s critique is the economics of decentralized consensus. The report argues that public permissionless blockchains compensate validators through transaction fees that rise as network activity increases, making congestion, longer confirmation times and higher costs structural features of the system rather than temporary technical shortcomings. According to BIS, these characteristics undermine the efficiency and network effects that are essential for a unified monetary system.

The Basel-based institution further argues that permissionless blockchains lack the clear governance and accountability frameworks required for institutional finance. Without an identifiable entity responsible for maintaining the integrity of the system, resolving disputes or ensuring compliance with financial integrity standards, BIS contends that such networks face significant obstacles to supporting large-scale regulated financial activity.

Rather than rejecting tokenization itself, BIS advocates a “unified ledger” architecture that combines tokenized central bank money, tokenized commercial bank deposits and tokenized financial assets on programmable platforms operating within regulated legal and institutional frameworks.

By preserving the benefits of tokenization, including programmable transactions and faster settlement, while maintaining the institutional foundations of the existing monetary system, BIS said that financial markets can improve efficiency without sacrificing monetary stability, financial integrity or public trust.

Related: Why stablecoins and SWIFT may have to coexist