BIS Warns Stablecoin Market Risks as USDT, USDC Dominate $320B Sector

According to the Bank for International Settlements (BIS) 2026 Annual Economic Report released in June, the global stablecoin market worth approximately $320 billion as of May 2026 carries significant structural risks. The report notes that 99.4% of fiat-backed stablecoins by market value are pegged to the U.S. dollar, with Tether's USDT and Circle's USDC dominating the sector. The BIS warns that stablecoins currently lack institutional foundations and resemble exchange-traded fund shares rather than functional money. Additional concerns include illicit on-chain activity due to permissionless blockchain transfers and potential fire sales of Treasury bill reserves backing stablecoins, which could transmit stress to money markets. The report flags risks of dollarization in emerging markets, allowing households to bypass capital controls. Rather than banning stablecoins, the BIS recommends fixing structural weaknesses by integrating blockchain technology with tokenized money anchored in central bank reserves.
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