Key Takeaways
- Pablo Hernández de Cos flagged four failures in stablecoins during his Jackson Hole address.
- Global stablecoin supply has climbed to $308B as of this month.
- De Cos urged central banks to prioritize tokenized deposits over stablecoins as part of his commentary.
A Blunt Verdict From Basel
The BIS is the institution central bankers turn to for standards, not crypto hot takes, which made de Cos’s sharp remarks stand out even more. Addressing central bankers gathered at the Federal Reserve Bank of Kansas City’s annual retreat, he said stablecoins “do not yet uphold the foundational properties of money,” a direct rebuttal to an asset class that has spent much of the year marketing itself as the future of digital payments. He further added:
The growing adoption of dollar-pegged stablecoins has also raised concerns in some jurisdictions about monetary sovereignty and the potential for digital dollarization.
Jackson Hole is usually reserved for interest-rate signaling, not crypto commentary. De Cos used the platform anyway to draw a hard line between what he considers real money and what merely imitates it onchain.
Four Reasons Stablecoins Fall Short
De Cos built his case around four properties he says stablecoins lack. These include:
- Par redeemability
- Elasticity
- Interoperability
- Financial integrity.
In practice, that means issuers can’t guarantee a one-to-one cash-out the way a bank deposit can, supply doesn’t expand and contract with real economic activity, tokens move poorly across competing blockchains, and self-custodied wallets make anti-money-laundering enforcement harder than in traditional banking.
De Cos’s preferred fix is tokenized deposits, which are basically account-based bank liabilities that settle through central bank reserves and preserve the “singleness” of money that stablecoins can’t guarantee. He said:
Tokenised deposits offer a more direct path to harness tokenisation while preserving the monetary system’s foundations.
Backers of stablecoins have pointed to faster settlement and lower fees as core advantages over legacy rails, but de Cos suggests regulators plan to weigh those benefits against strict monetary-integrity standards before endorsing wider use.
The stakes are getting bigger by the month, given that global stablecoin supply has climbed to $308 billion, up more than 14% year over year, even after pulling back from a May peak, and Tether’s USDT alone accounts for roughly 60% of that total, exactly the kind of scale de Cos argues the asset class isn’t structurally built for.
Why This Lands Differently Now
De Cos’s speech landed on a day when crypto markets already had plenty to process. Bitcoin’s price, for starters, slipped below $80,000 the same day, after Federal Reserve Chair Kevin Warsh used his own Jackson Hole keynote to reaffirm a hawkish inflation stance and push short-term Treasury yields higher.
He separately suggested that steering stablecoin activity toward U.S. Treasuries could help lower government borrowing costs, tying the debate over what counts as money directly to how governments fund themselves.
Crypto markets, already whipsawed by rate speculation, now have one more variable to price in.
