Stablecoins Challenge BIS Tokenized Deposit Model

Tether CEO Paolo Ardoino has challenged the Bank for International Settlements (BIS) after it backed tokenized bank deposits over stablecoins. BIS General Manager Pablo Hernández de Cos cited concerns about stablecoin redeemability, interoperability, anti-money-laundering controls and monetary sovereignty. He said tokenized deposits, as commercial-bank liabilities settled through central bank accounts, better preserve the “singleness” of money. Ardoino argued that fully reserved stablecoins such as USDT can be backed by liquid assets, including US Treasury securities, while traditional bank deposits rely on fractional-reserve banking and generally lack equivalent deposit insurance. He suggested the BIS is concerned that stablecoins could expose weaknesses in the banking model. The debate has expanded as JPMorgan, Bank of America, Citigroup and Wells Fargo develop a shared tokenized-deposit network targeted for launch in the first half of 2027. SWIFT has also tested a blockchain ledger for tokenized cross-border payments with 17 banks. BIS officials expect tokenized deposits to handle most everyday payments, although stablecoins and tokenized deposits may coexist. US lawmakers and banking groups are also examining the issue. Banks warn that rewards on stablecoin balances could draw deposits away from lenders, reduce funds available for loans and increase borrowing costs. The BIS has similarly warned that stablecoin reserve demand could boost Treasury purchases while weakening bank funding. The dispute could shape stablecoin regulation, payment adoption and liquidity, but it does not represent an immediate USDT price catalyst. Traders should monitor stablecoin supply, liquidity, regulatory decisions and flows between bank and crypto markets.