BIS Warns Stablecoins May Undermine Capital Controls in Emerging Markets

The global central bank body says dollar-backed stablecoins are creating new channels for cross-border dollar access that may reduce the effectiveness of foreign exchange restrictions.

The Bank for International Settlements (BIS) has warned that the growing adoption of dollar-backed stablecoins could undermine capital controls in emerging markets, arguing that digital dollars are creating alternative channels for moving value across borders outside traditional banking systems.

In a study published Tuesday, the BIS examined stablecoin activity across more than 130 economies and found that stablecoin flows appear to be "largely unaffected" by both broad and targeted capital flow restrictions.

According to the report, because stablecoins circulate partly outside the conventional financial system, governments may find it increasingly difficult to enforce foreign exchange controls that have traditionally been used to manage capital inflows and outflows.

The BIS said stablecoins are becoming an increasingly important source of U.S. dollar liquidity, particularly in emerging markets and developing economies where access to foreign currency is often constrained.

Researchers concluded that foreign exchange restrictions and capital controls are less effective against stablecoins than against conventional foreign currency bank deposits, creating new pathways for cross-border financial activity.

The report also cautioned that policymakers may need to reassess existing monetary tools as digital dollars become more widely used.

“Dollarization is hard to reverse once established,” the BIS noted, warning that greater reliance on privately issued dollar-backed stablecoins could complicate domestic monetary policy and financial stability.

The report comes as regulators worldwide continue developing dedicated frameworks for stablecoins rather than restricting their use.

Over the past year, jurisdictions including the United States, the European Union and Japan have advanced regulatory regimes designed to integrate stablecoins into the broader financial system while establishing prudential and consumer protection requirements.

The findings also contrast with recent policy initiatives such as the U.S.-UK Joint Statement on Stablecoins, in which both governments committed to supporting cross-border stablecoin activity and promoting regulatory cooperation to facilitate their use in payments and capital markets.

The latest study reinforces the BIS's broader position on stablecoins.

In its2026 Annual Report, the institution argued that stablecoins do not yet possess the core characteristics required of money, including singleness, elasticity, interoperability and integrity.

While acknowledging the rapid growth of digital money, the BIS has consistently maintained that privately issued stablecoins should complement rather than replace sovereign monetary systems.

Despite ongoing policy debates, stablecoin adoption continues to expand globally.

The total supply of U.S. dollar-backed stablecoins reached approximately $292.6 billion, up from $253 billion a year earlier, reflecting continued institutional and retail demand for digital dollar payment and settlement infrastructure.

As stablecoins become more deeply integrated into cross-border finance, the debate is shifting beyond payments and regulation to broader questions about monetary sovereignty, capital controls and the future role of digital dollars in the global financial system.