BIS Warns USDT and USDC Resemble ETFs, Posing Run and Banking Contagion Risks

USDT and USDC use dollar-denominated assets to maintain their $1 pegs and are widely used in crypto trading and institutional overnight cash settlement. If their reserves cannot be liquidated quickly, losses from a depegging could spread. Germany's Union Investment, which manages nearly $620 billion in assets, therefore argues that reserve structures containing holdings such as gold and Bitcoin more closely resemble funds exposed to market risk.

On May 19, 2026, Union Investment executive Christoph Hock told the Digital Money Summit in London that USDT and USDC should not be considered stablecoins. Tether held 148 metric tons of gold worth $23 billion as of January 2026. Hock also cited USDC's previous 13% plunge to $0.87 and warned that even U.S. Treasury bills might not be liquidated quickly enough during a run.

Stablecoins are crypto assets pegged to fiat currencies such as the U.S. dollar. They promise faster, cheaper cross-border payments while making dollars more accessible in regions with high inflation or capital controls. The Bank for International Settlements (BIS) said about 98% of stablecoins are denominated in dollars, warning that wider adoption could weaken monetary sovereignty and regulatory effectiveness in emerging markets.

Speaking at a Bank of Japan seminar in Tokyo on April 20, 2026, BIS General Manager Pablo Hernández de Cos warned that stablecoins could circumvent capital and foreign-exchange controls, facilitate tax evasion and fuel dollarization. Their global market capitalization stood at about $315 billion in early April. On-chain transaction volume reached $35 trillion in 2025, but only about $390 billion was used for payments, while stablecoins were estimated to account for most illicit transactions in the crypto ecosystem.