Stablecoin News – On July 12, 2025, the Bank for International Settlements (BIS) released a report urging global regulators to adopt coordinated stablecoin regulations to address growing financial stability risks.
With the stablecoin market reaching $253 billion, dominated by Tether’s $158 billion USDT and Circle’s $61 billion USDC, the BIS warns that unchecked growth could disrupt monetary policy, cross-border capital flows, and traditional banking systems.
The report emphasizes the need for a unified global framework to prevent fragmentation, as divergent approaches emerge in the U.S., EU, and Asia.
The BIS highlights stablecoins’ role in facilitating $28 trillion in transactions in 2024, particularly for remittances and DeFi trading, with two-thirds of activity linked to decentralized finance.
In regions like Sub-Saharan Africa, stablecoins reduce remittance costs from 6.6% to under 3%, but their rapid adoption raises concerns about systemic risks, such as potential bank runs if reserves are mismanaged.
The BIS cites past stablecoin failures, like algorithmic models, to underscore the importance of mandating 1:1 reserves backed by liquid assets like cash or Treasuries.
In the U.S., the GENIUS Act, nearing a House vote, proposes such standards, while the EU’s MiCA framework, fully active in July 2025, enforces strict reserve and transparency rules.
However, the BIS notes challenges in regions like China, where Shanghai’s proposed yuan-pegged stablecoin aims to counter dollar dominance but faces regulatory hurdles due to crypto bans.
Hong Kong’s Stablecoin Ordinance, driving $1.2 billion in issuance, offers a model for compliance, but global coordination remains elusive.
The BIS also addresses stablecoins’ integration into traditional finance, as seen with PayPal’s PYUSD, which expanded to Solana for faster transactions, per PayPal’s newsroom. PYUSD’s $715 million market cap reflects growing fintech adoption, but its 30% decline on Solana due to waning DeFi incentives highlights volatility risks.
The BIS recommends global standards for audits, KYC/AML compliance, and reserve reporting to ensure stability, warning that without them, stablecoins could undermine central bank control.
As stablecoins like PYUSD and RLUSD gain traction for payments, the BIS urges regulators to balance innovation with oversight.
Failure to coordinate could lead to a fragmented digital finance landscape, with dollar-based systems in the U.S., digital euro regimes in Europe, and regional models elsewhere, complicating global trade and monetary policy.
The report calls for urgent action to safeguard financial systems while harnessing stablecoins’ potential.
