Bank for International Settlements researchers don’t think stablecoins will live up to the hype

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A recent report from the Bank for International Settlements has raised concerns about the ability of stablecoins to maintain parity with their underlying assets, challenging their stability and reliability as digital currencies.

in a recent reports The Bank for International Settlements (BIS) is conducting a review of stablecoins, a type of cryptocurrency pegged to assets such as the U.S. dollar. The report claims that these digital assets fail to consistently maintain the same value as their underlying assets, contrary to what their names suggest.

BIS examined various stablecoins, including Pax Gold, USD Coin (USDC), and Tether (USDT), and cited the notable collapse of Terra’s UST, which had a significant impact on the cryptocurrency market last year. Stablecoins are often considered a potential alternative payment method due to their theoretically stable value.

However, the BIS report emphasizes that for stablecoins to be effective as a medium of exchange, they must maintain their value throughout the trading day, but according to their findings, this condition cannot be reliably met.

Moody’s Analytics highlighted this in a report, adding to concerns recent articles Within a year, fiat-backed stablecoins decoupled from their underlying assets more than 600 times. This volatility undermines the fundamental concept of stablecoins and poses challenges for users seeking stable digital currencies.

The report states that the main problem may lie in the opacity of stablecoin reserves – the quality and availability of these reserves are crucial to trust in their stability. The Bank for International Settlements said that without adequate transparency and regulation, the credibility of stablecoins and their ability to maintain their pegs could be seriously compromised, casting doubt on their viability as a secure digital currency.


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