Calling B.S. on the BIS Stablecoin Propaganda By Matt Brienen Published: 2026-06-30T00:04:18+00:00 --- ### The BIS Stablecoin Argument Feels Like A Stretch The Bank for International Settlements is taking aim at stablecoins again, and this time the argument is that they behave less like money and more like ETFs. The basic idea is that because stablecoins can trade slightly above or below $1 in secondary markets, and because not every user can redeem directly with the issuer at perfect par, they should not be treated like true money. I think that framing is weak. Not because stablecoins are perfect. They are not. Stablecoins have risks. Issuer risk, reserve risk, redemption risk, regulatory risk, exchange risk, and smart contract risk all matter. But the BIS argument feels like it is grading stablecoins against some fantasy version of money that does not actually exist in the real world. Their point is basically this: real money should be accepted with no questions asked. When you pay with dollars, nobody questions the legitimacy or value. Stablecoins, on the other hand, can move slightly away from $1, especially on exchanges, so they behave more like ETF shares trading at a premium or discount to net asset value. That sounds clean in theory, but it falls apart when you look at how money actually works. --- ### Cash Is Not Frictionless Either The idea that dollars are accepted “with no questions asked” is not really true. Businesses check large bills all the time. Some places refuse cash entirely. Some places will not take $50s or $100s. Banks can freeze transfers. Payment processors can block transactions. Wire transfers can get delayed. International payments can be rejected, reviewed, or taxed with massive fees. So pretending that fiat money moves around the world with zero friction while stablecoins are uniquely flawed because they sometimes trade at $0.999 or $1.001 feels dishonest. Every payment system has friction. The real question is not whether friction exists. The real question is how much friction exists, who pays for it, how transparent it is, and how quickly value settles. --- ### Stablecoins Are Being Compared To The Wrong Thing The BIS wants to compare stablecoins to perfect money. I think the better comparison is stablecoins versus the existing banking and FX system. If I move dollars across borders through traditional rails, I am almost never getting perfect one-for-one settlement without cost. There are FX spreads, wire fees, banking delays, intermediary banks, compliance reviews, and sometimes days of waiting. Nobody in that chain is moving money for free. Stablecoins are not magic, but they can compress a lot of that friction. If I swap dollars into USDC, move it on-chain, and someone else receives it in another market, there may still be fees. There may still be slippage. There may still be exchange spreads. But compared to the old FX system, the cost and speed can be dramatically better. That is the part the BIS framing seems to ignore. --- ### The $1 Peg Argument Is Overplayed The report points to the fact that stablecoins do not always trade exactly at $1 on secondary markets. That is true. But it is also not the slam-dunk argument they think it is. When retail users buy or sell stablecoins on exchanges, they are not always interacting directly with the issuer. They are interacting with liquidity venues, order books, market makers, spreads, and settlement systems. If USDC or USDT is trading slightly above or below $1 on an exchange, that does not automatically mean the asset is broken. It may simply reflect liquidity, demand, fees, market structure, or the cost of providing that exchange service. Would people feel better if every stablecoin transaction displayed as exactly $1 plus a separate visible fee? Maybe. But economically, that is not much different than seeing a tiny deviation from par with a lower explicit fee. Either way, someone is getting paid to create liquidity, settle the trade, and move value. No one is doing FX swaps for free. No one is running exchanges for free. No one is managing stablecoin infrastructure for free. The idea that a tiny deviation from $1 proves stablecoins are not money feels more like a rhetorical trick than a serious analysis. --- ### Institutional Redemption Is A Different Market Another issue is the difference between institutional and retail access. Large institutions often have more direct access to stablecoin issuers, deeper liquidity, and near-par redemption channels. Retail users typically go through exchanges, wallets, apps, and secondary markets. That difference matters, but it does not make stablecoins useless or ETF-like by default. It means the market has layers. Traditional finance has layers too. Retail investors do not get the same FX rates as massive institutions. Retail users do not get the same banking terms as multinational corporations. That is not unique to crypto. In fact, stablecoins can help narrow that gap over time by making dollar liquidity more accessible, portable, and programmable. That does not mean everyone gets perfect issuer-level redemption in every scenario. But again, compared to traditional rails, the improvement can still be meaningful. --- ### The BIS Is Ignoring Why Stablecoins Are Growing Stablecoins did not become a major part of crypto because people love taking unnecessary risk. They grew because they solve real problems. They give traders a way to move between assets without constantly touching banks. They give users in unstable currency environments access to dollar-like liquidity. They allow faster settlement across exchanges and chains. They support DeFi markets. They make global transfers easier. They are becoming a core piece of on-chain payments and tokenized finance. That does not mean every stablecoin is safe. It does not mean every issuer should be trusted blindly. It does not mean regulation is irrelevant. But it does mean the market found product-market fit for a reason. When the BIS frames stablecoins mainly as a foreign exchange risk or ETF-like wrapper, it conveniently skips the part where the legacy system is expensive, slow, fragmented, and often inaccessible to the people who need better rails the most. --- ### The ETF Comparison Misses The Point Calling stablecoins ETF-like because they can trade at slight premiums or discounts is technically clever, but practically misleading. An ETF is primarily an investment product. A stablecoin is primarily a settlement and liquidity product. People do not usually hold USDC because they are trying to get upside exposure to Circle’s reserve portfolio. They hold it because they want a digital dollar that can move around crypto rails quickly. That difference matters. Yes, reserves matter. Yes, redemption quality matters. Yes, transparency matters. But the intent and usage are totally different. Stablecoins are not being used like SPY or a bond ETF. They are being used as quote currency, collateral, settlement asset, payment rail, and on-chain dollar liquidity. If the BIS wants to talk about reserve transparency, redemption access, and systemic risk, that is a fair conversation. But saying stablecoins resemble ETFs more than money because secondary markets are not always exactly at par feels like a forced narrative. --- ### This Feels More Like Defensive Messaging Than Neutral Analysis The timing and tone of these arguments matter. Central banks and global financial institutions are trying to figure out how to respond to stablecoins because stablecoins are proving that private digital dollars can move faster than traditional banking rails. That is threatening. It challenges the existing FX system. It challenges correspondent banking. It challenges the idea that only banks and central banks should control settlement infrastructure. It also pressures governments to modernize payment rails and clarify stablecoin regulation. So when institutions like the BIS frame stablecoins as unstable, ETF-like, and risky to global money systems, I think we have to ask whether this is objective analysis or defensive positioning. Probably both. But the defensive part is obvious. --- ### Stablecoins Still Need Guardrails To be clear, I am not saying stablecoins are risk-free. They absolutely need standards. Issuers should be transparent about reserves. Redemption terms should be clear. Audits and attestations matter. Regulation should distinguish between fully backed payment stablecoins and more experimental or undercollateralized designs. There is a real difference between a stablecoin backed by cash and short-term Treasuries versus some algorithmic design pretending to be stable because a whitepaper says so. We learned that lesson the hard way. But strong standards are different from bad-faith framing. Saying “stablecoins need better regulation and transparency” is reasonable. Saying “stablecoins are basically ETF-like instruments and not money” feels like an attempt to discredit the entire category. --- ### The Real Question The real question is not whether stablecoins are perfect money. They are not. The real question is whether they are better than many of the systems they are competing with. For a lot of users, the answer is yes. They settle faster. They move globally. They operate outside banking hours. They plug into exchanges, wallets, DeFi, payment apps, and tokenized asset markets. They reduce some of the friction that legacy finance has treated as normal for decades. That is why this BIS framing bothers me. It focuses on tiny deviations from par while ignoring the much larger inefficiencies in the traditional system. It calls out stablecoin friction while pretending fiat rails are frictionless. It criticizes secondary market pricing while ignoring the reality that every financial rail has spreads, fees, and access tiers. --- ### The Bigger Takeaway Stablecoins are not perfect. They are not riskless. They are not all created equal. But calling them ETF-like because they sometimes trade slightly above or below $1 is a lazy way to frame a much bigger debate. Stablecoins are payment rails, liquidity rails, settlement tools, and access points into digital dollar markets. They are one of the clearest examples of crypto solving an actual problem. The BIS can call them whatever it wants. I call the framing what it is: stablecoin propaganda dressed up as financial stability analysis. The legacy system is not scared because stablecoins do nothing. It is scared because they work.