BIS Warns Dollar Stablecoins Can Bypass Capital Controls in Emerging Markets

The Bank for International Settlements has raised concerns that dollar-backed stablecoins are able to sidestep traditional capital controls, potentially undermining how governments manage foreign exchange restrictions. The findings come from a new study examining stablecoin activity across more than 130 economies.

Key Findings From the Report

Researchers found that stablecoins remain largely unaffected by both broad and targeted capital flow restrictions, since much of their activity occurs outside standard regulatory oversight. The report suggests these tokens are notably less constrained by foreign exchange controls compared to traditional foreign currency bank deposits, a gap that could weaken the effectiveness of long-standing government financial policies.

Growing Dollar Access in Emerging Economies

The study points to stablecoins as an increasingly important channel for accessing U.S. dollar liquidity, particularly in developing economies. Officials cautioned that once a country becomes reliant on dollar-based digital assets, reversing that trend becomes difficult, raising longer-term policy challenges for emerging market regulators.

Continued Institutional Skepticism

The findings align with the BIS’s ongoing doubts about stablecoins meeting the core requirements of sound money, including consistency, flexibility, and interoperability. Despite this skepticism, stablecoin adoption continues to expand globally, with regulators in several major economies developing formal frameworks to bring these assets into regulated financial systems. The total supply of dollar pegged stablecoins has grown significantly over the past year, reflecting rising global demand.