BIS: Stablecoins Remain a Niche Market Despite Rapid Growth

Stablecoins remain a niche part of the global financial system despite their rapid expansion, according to the Bank for International Settlements (BIS), which argues that the future of digital finance lies in integrating tokenisation into the existing monetary system rather than replacing it.

In a special chapter of its 2026 Annual Economic Report, the BIS says stablecoins have gained traction primarily within crypto markets but continue to play only a limited role in mainstream payments and financial intermediation. While issuance has increased sharply in recent years, their use remains concentrated in crypto trading and decentralised finance rather than the real economy.

“Notwithstanding phases of rapid growth, the use of stablecoins remains modest,” the BIS suggests, noting that its market capitalisation stands around $320 billion. Despite its relative resilience in the broader crypto rout, the overall market remains “dwarfed” by trillions of US dollars in bank deposits. Meanwhile, despite emerging frameworks for regulating these tokens across various jurisdictions, the lack of growth in non-dollar denominated stablecoins has remained minuscule.

“Annual stablecoin transaction volume amounted to an estimated $28 trillion in 2025, equivalent to less than three business weeks of settlement volumes of the largest US wholesale payment systems; values net of transactions between wallets owned by the same party are far lower,” the BIS adds.

The report argues that stablecoins face structural limitations that make them unlikely to become a dominant form of money. Their value depends on the quality of reserve assets, they lack the elasticity of bank-created money needed to support economic activity, and fragmentation across issuers risks undermining the “singleness” of money – a core principle of modern monetary systems.

Instead, the BIS advocates building the next generation of financial infrastructure around tokenised central bank reserves, commercial bank deposits and government securities. Despite its downbeat tone about stablecoins, the report says that tokenisation has the potential to improve settlement efficiency, reduce operational frictions and enable programmable financial transactions while preserving confidence in money through the existing two-tier monetary system.

For wholesale financial markets, the BIS sees particular promise in tokenised platforms supporting cross-border payments, FX settlement and securities markets. Projects such as Agorá are cited as examples of how central banks and private financial institutions are exploring tokenised wholesale infrastructure without relying on privately issued stablecoins as settlement assets.

The BIS says a number of risks presented by stablecoins can be mitigated, including introducing capital requirements for stablecoin issuers and liquidity requirements for stablecoin reserve holdings, while other measures could include instituting protections for coin holders, exploring conditional access to central bank liquidity under stringent safeguards and establishing well defined disclosure and resolution mechanisms for issuers.

“When complemented by strong risk management practices that avoid moral hazard, such measures could reduce the risk of runs and strengthen the resilience of stablecoin arrangements. At the system-wide level, enhancing regulatory capabilities, monitoring and infrastructure will be key to assessing financial stability risks,” the report states.

The report arrives as policymakers worldwide accelerate work on digital money frameworks. While several jurisdictions are introducing regulatory regimes for payment stablecoins, the BIS maintains that regulation alone does not resolve the underlying shortcomings of privately issued digital currencies. Instead, it argues that public trust in money is best preserved by combining technological innovation with central bank money and commercial bank deposits operating on shared tokenised platforms.