BIS Calls for Global Cooperation on Stablecoin Regulation to Prevent Market Fragmentation
The Bank for International Settlements (BIS) has emphasized the need for international cooperation in regulating stablecoins, a type of cryptocurrency typically pegged to the U.S. dollar. Speaking in Japan, BIS General Manager Pablo Hernandez de Cos highlighted the potential risks stablecoins pose to monetary and fiscal policy, financial market stability, and efforts to combat illicit financing. He warned that without global coordination, differing regulatory frameworks could lead to market fragmentation and regulatory arbitrage, where firms exploit the least stringent regulations. The call for cooperation comes as countries like the United States work to establish regulatory frameworks for stablecoins, following the lead of regions such as Abu Dhabi and Singapore. The BIS also noted that stablecoins, like those issued by Tether and Circle, often function more like securities than traditional money, due to redemption frictions that cause deviations from their pegged value. 
