BIS Warns USDT and USDC Stablecoins Could Spur Financial Risk

The Bank for International Settlements (BIS) warned that fast growth of USDT and USDC stablecoins could create new systemic risks. BIS General Manager Pablo Hernandez de Cos said USDT and USDC often function more like investment products than reliable payment money, citing fee structures, regulation differences, and weaker secondary-market liquidity. BIS’s core concern is “moneyness” (how truly payment-like they are). It argues that during upswings, holders may rotate short-term government-debt exposure into USDT and USDC. If sentiment turns, rapid redemptions could force issuers to sell reserves, transmitting stress to traditional markets. The later article adds market-behavior context: many pilots led by traditional firms shifted quickly from payments to using stablecoins as bridge assets to buy BTC, ETH, and XRP, and to access DeFi exposure. It also notes the policy direction is tightening. Europe’s MiCA is positioned as a reference model, while global regulators emphasize investor protection and innovation controls. Crypto supporters counter that USDT and USDC track the dollar and that blockchain rails can lower cross-border costs. They also argue crypto pathways may sidestep parts of traditional AML/CTF coverage, though centralized issuers expanding stablecoin offerings should face stricter oversight. For traders, the key takeaway is that USDT and USDC are increasingly framed by regulators as a potential risk channel, increasing the odds of tougher compliance and market-structure adjustments.