Bank for International Settlements: Global Coordination of Stablecoin Regulation is Crucial to Prevent Market Fragmentation

Deep Tide TechFlow reports that on April 20, Pablo Hernandez de Cos, General Manager of the Bank for International Settlements (BIS), stated that globally coordinated stablecoin regulation is essential to prevent severe market fragmentation; otherwise, regulatory differences across jurisdictions could lead to regulatory arbitrage. He pointed out that stablecoins, typically pegged 1:1 to the US dollar, could weaken monetary and fiscal policies, trigger financial market stress, and hinder efforts to combat illicit financing. Currently, the two major stablecoins issued by Tether and Circle account for approximately 85% of the $315 billion global stablecoin circulation. He also noted that these two types of stablecoins, due to redemption frictions and other factors, are closer to securities rather than currencies, operating more like ETFs.