For the second time in three weeks the Bank for International Settlements (BIS) has published a highly critical paper about stablecoins. The previous one outlined how stablecoins are “unsound money” and the latest is entitled “Stablecoin growth – policy challenges and approaches”. The focus is on the challenges, with only hints about approaches and the need for a “more restrictive regime”.
With both papers, there’s a sense of déjà vu. When Facebook unveiled plans for the Libra stablecoin in 2019, regulators and legislators were united in opposing it. But that was six years ago, and the stablecoin genie is now well and truly out of the bottle. With President Trump’s administration embracing the private digital currencies, and stablecoin issuer Circle trading at more than six times its recent IPO price, there’s a definite buildup of momentum, even if it’s long on hype.
That’s likely the point. The BIS probably hopes to bring some of the expectations down to earth.
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