BIS Study Raises Concerns About the “Store of Value” of 68 Stablecoins

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  • The Bank for International Settlements (BIS) raised concerns about the stability and reliability of 68 stablecoins.
  • BIS accentuated the most prominent assets, including Tether, USD Coin, and Binance USD.
  • The BIS research concluded that “a stablecoin that never breaks its peg has yet to emerge.”

The Bank for International Settlements (BIS), an international financial institution, has raised concerns that the 68 stablecoins in the market “do not live up to their names”. In the comprehensive analysis released on November 8, the institution revealed that, to date, not one stablecoin has met the prerequisites to be a secure store of value.The study cited that none of the stablecoins evaluated were able to maintain parity with their pegged closing prices. In comparing backed stablecoins and unbacked stablecoins, the BIS further explained:

The fiat-backed ones [stablecoins] performed best: from January 2019 to September 2023, the median of the price-to-peg ratio for all fiat-backed stablecoins was exactly 1 in 94% of the days, compared with 77% and 50% of the days for crypto-backed and commodity-backed stablecoins, respectively.

The report also dove into the ins and outs of stablecoins, from their nature and classifications to their market trajectories, “price stabilization mechanisms, and the effect of transparency on their backing.” It also accentuates the most prominent assets, including Tether, USD Coin, and Binance USD.

Moreover, it highlights that these coins are generally marketed as “new forms of money” that safeguard investors’ assets against market fluctuations. The research thereafter referenced the crash of Terra’s stablecoin USDT, among other factors, that created a “discernible impact” on the market in 2022. Its collapse inevitably wiped out $2 trillion in the overall crypto market valuation and instigated the “crypto winter”.

Further, the BIS study emphasized that “a stablecoin that never breaks its peg has yet to emerge” and that “appropriate regulation and supervision are essential”. It added that with proper regulation, it would be possible to “prevent stablecoins from compromising the safety and efficiency of payments and the financial system more broadly”.

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