As lawmakers, regulatory bodies and monetary institutions increasingly weigh in on the rise of stablecoins, their approaches differ across jurisdictions. In its latest reports, the Bank for International Settlements (BIS) reiterates its sceptical stance on crypto-assets, concluding that stablecoins lack the fundamental characteristics of money. Meanwhile, the United States has taken a significant step in the opposite direction with the bipartisan passage of the GENIUS Act, establishing a regulatory framework aimed at supporting U.S. dollar-backed stablecoins. Against this backdrop, and amid the growing recognition of the strategic importance of stablecoin regulation – including implications for monetary sovereignty and financial stability – Switzerland is being called upon to define its position.
Stablecoins: Rapid Adoption, Expanding
InfluenceS
Stablecoins – blockchain-based digital tokens pegged to fiat
currencies, in practice predominantly the U.S. dollar – have
seen rapid market growth. The combined market capitalisation of
leading stablecoins USDT and USDC now exceeds USD 200 billion, and
their use in cross-border payments and decentralised finance
continues to increase. This momentum has prompted regulators and
policymakers to address their implications for financial stability,
compliance, and the global monetary system.
The BIS Position: Stablecoins Fall Short of
"Money"
In a series of recent publications (BIS Bulletin No. 108
"Stablecoin growth – policy challenges and
approaches" on 11 July 2025, and BIS Annual Economic Report,
Chapter III «The next generation monetary and financial
system» on 24 June 2025), the BIS challenges the ability of
stablecoins to serve as true monetary instruments, by finding that
they fail to replicate the three key properties of modern fiat
currencies:
Singleness: According to the BIS, stablecoins
lack the "no-questions-asked" quality of sovereign money,
as their value is not guaranteed by central banks and may fluctuate
relative to the fiat currency they reference.
Elasticity: Since stablecoins are typically backed
1:1 by high-quality liquid assets (e.g., fiat currency, sovereign
bonds), they cannot expand or contract in supply to meet systemic
liquidity needs in the same way traditional money can via central
bank credit mechanisms.
Integrity: Stablecoins, as bearer instruments,
shift the burden of AML monitoring to law enforcement authorities,
unlike fiat money, where these responsibilities are typically
delegated to regulated intermediaries (typically banks) executing
payments in fiat money (i.e. «book money»). The BIS
argues that this reduces the AML oversight and thus compromises the
integrity of stablecoins as payment instruments.
Despite these concerns on stablecoins, the BIS recognises the value of blockchain technology for modernising financial infrastructure, including the potential for tokenised representations of central bank reserves, commercial bank money, and sovereign debt. Such a framework could streamline clearing and settlement, enable automation (e.g., for delivery-versus-payment transactions), and allow for an automated monitoring of transactions – although the BIS does not comment on the privacy concerns raised by a complete surveillance of all money flows.
MiCA, the European Framework
The EU's response to the new asset models enabled by
blockchains has been the Markets in Crypto-Assets Regulation
(MiCA), in force since June 2023, which establishes a comprehensive
regulatory regime for crypto-assets, including stablecoins.
Designed to set a global benchmark, MiCA imposes significant
compliance obligations on issuers, which some market participants
view as too restrictive for euro-denominated stablecoins to
thrive.
Since late 2024, the EBA and ESMA have issued technical standards and guidelines for stablecoin issuers, covering liquidity, governance, and redemption requirements. Several euro-denominated stablecoins have registered under MiCA, but few have received full authorisation, reflecting industry caution about compliance costs and regulatory uncertainty. Meanwhile, the European Commission is investigating potential risks arising from the fact that differing regional regulations – especially in the EU, where stricter reserve requirements apply – could lead worldwide holders of stablecoins existing simultaneously under both EU and non-EU regulations (typically USDC) to favor EU redemptions in times of crisis because of the better protections it offers, potentially disadvantaging EU users.
The U.S. Approach: Encouraging Stablecoin Dollarisation
via the GENIUS Act
In contrast, the U.S. has adopted a more pragmatic and
innovation-friendly approach. The Guiding and Establishing National
Innovation for U.S. Stablecoins Act (GENIUS Act) – passed
with bipartisan support – aims to clarify the legal status
and oversight of U.S. dollar stablecoins. Compared to MiCA, the
U.S. framework is more flexible and decentralised, encouraging
market-led innovation.
Beyond the regulatory philosophy, strategic considerations also play a role. With U.S. federal debt exceeding $31.5 trillion and institutional investor appetite for U.S. Treasury bills (T-bills) declining in some quarters, stablecoin issuers have emerged as a significant new class of T-bill purchasers. In 2024, these issuers ranked among the top three buyers of T-bills, helping to stabilise demand and exert downward pressure on yields. As U.S. dollar denominated stablecoins expand worldwide, they function as a synthetic dollar instrument in offshore markets and as a medium for ultimately selling U.S. debt to stablecoin holders, in particular in emerging markets where access to U.S. dollars through the banking system is more difficult and where the holding of U.S. dollars is attractive due to a less stable local currency.
The expansion of USD denominated stablecoins, however, raises monetary sovereignty concerns for all the other monetary jurisdictions, as it undermines their ability to make decisions and exercise influence over the monetary system within their borders, and creates a risk of capital flight.
The Swiss Perspective: Between Innovation and
Sovereignty
In Switzerland, the financial industry's stablecoin strategy
remains to be further defined. On 30 April 2025, the Swiss Bankers
Association (SBA) released an analysis report suggesting that
Switzerland – leveraging its strong financial ecosystem and
innovation track record – could benefit from the issuance of
Swiss franc-denominated stablecoins. Such an initiative is
described not only as a commercial opportunity for Swiss financial
institutions, but also as a monetary sovereignty tool that could
preserve and extend the Swiss franc's relevance as a reserve
currency internationally.
The SBA further recommends that the Swiss Federal Department of Finance and the State Secretariat for International Financial Matters integrate these considerations into their ongoing legislative efforts to adapt financial markets law to support new business models.
However, the SBA notes that the Swiss financial markets supervisory authority (FINMA) currently requires (as stated in its July 2024 Communication on stablecoins) stablecoin issuers to verify the identity of all token holders, regardless of whether a direct contractual relationship exists – an interpretation that appears to exceed current international AML standards and could impede the launch and adoption of Swiss regulated stablecoins.
Strategic Outlook: A Call for Swiss
Pragmatism
As the global regulatory landscape for stablecoins takes shape,
Switzerland faces a strategic inflection point. While the U.S. is
proactively leveraging stablecoins to reinforce dollar dominance
and the EU is focused on setting an example through high regulatory
standards, Switzerland has the opportunity to chart a third path
– one that balances regulatory safeguards with a pragmatic
and swift response to preserve and expand its monetary sovereignty
and enable financial innovation. However, this would imply a shift
of focus by the Swiss authorities, in particular FINMA, from
regulatory conservatism toward enabling a controlled yet
user-friendly environment for the issuance of Swiss franc
stablecoins.
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