A new report from the Bank for International Settlements (BIS) challenges the notion that stablecoins can serve as real money in a modern financial system.

According to the BIS Annual Economic Report 2025, stablecoins fail the fundamental tests of “singleness,” “elasticity” and “integrity”— three critical criteria that define effective monetary instruments.

The BIS describes stablecoins as “digital bearer instruments” that resemble financial assets more than true money. “Stablecoins perform poorly when assessed against the three tests for serving as the mainstay of the monetary system,” the report claims.

Unlike central bank-backed money, which is accepted “at par” and requires no background checks, private entities issue stablecoins and often trade at fluctuating rates. This undermines the core principle of monetary singleness, it claims.

Related: South Korea’s central bank wants gradual stablecoin rollout

Stablecoins fail elasticity and integrity tests

Elasticity, the second test, is crucial for absorbing shocks and meeting large-value payment demands, BIS said in its report.

It pointed out that “any additional supply of stablecoins thus requires full upfront payment by its holders,” likening it to a “strict cash-in-advance setup” that contrasts with the flexibility of modern banking systems, where central banks provide liquidity as needed.

The third and perhaps most damning failure lies in the area of integrity. The report claims stablecoins’ design, especially those transacted via unhosted wallets on public blockchains, makes them prone to financial crime.

“Stablecoins have significant shortcomings when it comes to promoting the integrity of the monetary system,” the BIS notes, emphasizing their vulnerability to money laundering, sanctions evasion and terrorist financing.

Related: Malaysia launches Digital Asset Hub to test stablecoin, programmable money

Stablecoins should have a limited role

While acknowledging the continued demand for stablecoins due to features like cross-border accessibility and lower transaction costs, the BIS argues that these instruments should only play a limited, well-regulated role.

“Society can re-learn the historical lessons about the limitations of unsound money,” the report cautions. “Bold action by central banks and other public authorities can push the financial system along the right path, in partnership with the financial sector.”

Circle, the company behind USDC (USDC), saw its stock drop more than 15% on Tuesday after the BIS report, hitting $222. CRCL shares reached an all-time high of $299 on Monday.

Despite its hard take on stablecoins, the BIS report praised tokenization as a “transformative innovation” for the next-generation monetary and financial system. It said tokenization builds on the current financial system rather than replacing it.

Meanwhile, some in the crypto community said it is “no surprise” that the BIS paper is generally negative on stablecoins, given that it is a “regulatory body owned by global central banks.”

“The BIS is hysterical in its opposition to crypto,” Jim Walker, chief economist at Aletheia Capital Limited, wrote. “The first criterion, backed by a central bank, should make it a laughing stock given the historical failures of those institutions around the world.”

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]]> https://earlybirdsinvest.com/bis-says-stablecoins-fail-as-money-calls-for-strict-limits-on-their-role/feed/ 0 44022 https://earlybirdsinvest.com/turkey-slaps-strict-new-crypto-oversight-mandatory-source-checks-3k-daily-stablecoin-limit/ https://earlybirdsinvest.com/turkey-slaps-strict-new-crypto-oversight-mandatory-source-checks-3k-daily-stablecoin-limit/#respond Tue, 24 Jun 2025 15:19:34 +0000 https://earlybirdsinvest.com/turkey-slaps-strict-new-crypto-oversight-mandatory-source-checks-3k-daily-stablecoin-limit/

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Hassan Shittu

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Hassan Shittu

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Hassan, a Cryptonews.com journalist with 6+ years of experience in Web3 journalism, brings deep knowledge across Crypto, Web3 Gaming, NFTs, and Play-to-Earn sectors. His work has appeared in…

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June 24, 2025

Turkey’s Ministry of Treasury and Finance is tightening regulations on crypto asset service providers in a bid to clamp down on illicit financial activities. According to the Ministry, digital asset platforms must now collect and verify more detailed information about user transactions.

This information includes obtaining a written explanation of at least 20 characters describing the purpose of each transfer, along with verifying the origin of funds involved.

Per AA, the government believes this measure will enhance transparency and help identify suspicious activity earlier in the transaction process.

Turkey Impose Withdrawal Restrictions to Disrupt Illicit Flows

In a major shift, the new regulation imposes a delay on crypto asset withdrawals. Any crypto purchased, exchanged, or deposited will be subject to a 48-hour waiting period before it can be withdrawn.

For new users making their first withdrawal, the waiting period will extend to a minimum of 72 hours. Authorities believe these delays will reduce the ability of criminal actors to quickly transfer illicit funds outside the system before they are detected or blocked.

Stablecoins are also under scrutiny in the new regulatory framework. The Ministry will impose a daily transfer cap of $3,000 and a monthly limit of $50,000 for these digital assets.

These restrictions are designed to prevent the rapid movement of large sums of money that may be connected to illegal betting, fraud, or other criminal proceeds.

However, platforms that fully comply with the travel rule, which requires collecting identifiable information about both sender and receiver will be allowed to operate with limits twice as high.

While the regulations are strict, the Ministry emphasized that they do not aim to stifle legitimate activities within the crypto space. Treasury and Finance Minister Mehmet Şimşek stated that transactions linked to market making, liquidity provision, and arbitrage will be permitted without restriction.

Notably, the Ministry issued a clear warning to platforms that fail to comply with the new rules. Sanctions may include administrative penalties, financial fines, or even the denial or cancellation of operational licenses.

Turkey Continues to Tighten Crypto Legal Framework

The latest enforcement actions build on Turkey’s broader regulatory overhaul published on March 13, 2025, through amendments to Capital Markets Law No. 6362. These changes placed crypto platforms under the oversight of the Capital Markets Board (CMB).

Two communiqués, III-35/B.1 and III-35/B.2 set out new rules for platform structure, capital requirements, internal audits, and customer protection. Platforms must be joint-stock companies with minimum capital and approved management.

Aside from this, they are also required to conduct proof-of-reserve audits, partner with CMB-approved custodians, and maintain separate accounts for user funds.

Additional rules govern asset listings, conflict of interest policies, risk disclosures, and dispute resolution processes to enhance user safety and platform transparency.

Prior to then, Turkey introduced tighter crypto rules in February 2025 to strengthen anti-money laundering (AML) compliance and align with global standards. Announced in the last week of 2024, the regulations require crypto service providers to collect user identification for transactions over 15,000 lira (about $425).

Modeled after the EU’s MiCA framework, the rules aim to curb money laundering and terror financing, as Turkey’s presence in global crypto markets continues to grow.