BIS Report Compliance Watch: The Real Risks of Stablecoins, Not Just “De-pegging”

Author: compliance Xiaobai

Recently, the Bank for International Settlements (BIS) released Chapter 3 of its “Annual Economic Report”: Anchoring trust in money: innovation beyond stablecoins. This can be understood as: Anchoring trust in money: innovation paths beyond stablecoins. The report was released on June 23, 2026. From a macroeconomic and financial perspective, this report discusses the future monetary system, tokenization, and stablecoins. However, from a compliance perspective, it truly reminds us that the problem with stablecoins is not just whether their price will de-peg, but whether they can be integrated into an identifiable, monitorable, accountable, and regulable financial system.

I. BIS is not against technology, but is asking: where does trust come from? BIS acknowledges that stablecoins and tokenization do bring some efficiency improvements, such as faster payments, programmable payments, atomic settlement, and less reconciliation friction. The report also points out that DLT and tokenization can place assets and funds on programmable ledgers, supporting automated and round-the-clock operations. However, BIS’s core view is that money is not purely a technological product. Money becomes money not just because it can transfer value, but because there is an institutional arrangement behind it: a common unit of account, certainty of redemption at face value, liquidity support, a regulatory and legal framework, and financial integrity requirements. This is crucial for compliance professionals. Because any new payment tool, once it enters large-scale usage scenarios, will ultimately face the same question: who identifies the customer? Who monitors transactions? Who handles anomalies? Who bears responsibility?

II. The compliance risk of stablecoins is not just on-chain anonymity. When many people talk about stablecoin risks, their first reaction is “on-chain anonymity” and “wallets are hard to trace.” But the BIS report provides a more systematic view. In the traditional financial system, banks and regulated institutions bear responsibilities such as customer identification, transaction monitoring, suspicious activity reporting, and stopping or reversing payments when necessary. In contrast, stablecoins primarily circulate on public, permissionless blockchains, where pseudo-anonymity, non-custodial wallets, cross-chain bridges, and mixing tools can weaken KYC and AML/CFT controls. This means that stablecoins do not present a single point of risk, but a set of combined risks: it is not always clear who the customer is; the origin of funds may not be fully traceable; the purpose of transactions may not be explainable; after crossing chains, the path may be fragmented; and if problems arise, the responsible party may not be clear.

Therefore, for compliance departments, it is not enough to ask, “Is this address risky?” They should ask: Why does this customer want to use stablecoins? How do stablecoins enter and exit between fiat currency accounts? Who are the counterparties? What is the relationship between wallets, exchanges, and payment institutions? Is the fund path consistent with the customer’s background and business model?

III. On-chain transparency does not equal compliance transparency. Stablecoin proponents often say: on-chain transactions are public, therefore more transparent. This statement is only half true. While on-chain data is indeed visible, “address visibility” does not equal “identity visibility.” “Transaction path visibility” does not equal “transaction purpose clarity.” BIS also mentions that blockchain analytics firms are already supporting law enforcement agencies, and some stablecoin issuers have frozen specific on-chain addresses, indicating that on-chain technology does help in risk identification. However, BIS also emphasizes that these measures cannot replace daily, large-scale AML/CFT controls. True compliance is not about buying a tool, but about establishing a closed loop: before customer onboarding, can virtual asset exposure be identified? During transactions, can on-chain and off-chain fund flows be monitored? When risks are flagged, can they be manually reviewed and explained? After suspicious leads are formed, can they be recorded, escalated, and reported? After model and rule adjustments, can they be audited and reviewed? Technology is only one link in the compliance chain, not compliance itself.

IV. Stablecoins will bring “on-chain risks” back to traditional finance. The BIS report mentions that as of the end of May 2026, the market capitalization of stablecoins was approximately $320 billion; the estimated annual transaction volume of stablecoins in 2025 was about $28 trillion, but after excluding transfers between wallets of the same entity, the actual economic significance is much lower. These figures illustrate one thing: stablecoins are already large enough to not be ignored by compliance departments; but they are not yet mature enough to completely replace the existing financial system. More importantly, stablecoin risks will not remain on-chain. They will re-enter traditional financial institutions through deposits and withdrawals, exchanges, payment institutions, trade scenarios, cross-border settlements, and customer accounts.

For example: customers frequently deposit funds into virtual asset platforms using bank accounts; corporate clients claim to be engaged in cross-border trade, but the funds ultimately flow through stablecoin channels; individual customer accounts receive large amounts from strangers and then concentrate on purchasing virtual assets; customers explain these as “investment,” “settlement,” or “foreign exchange,” but their transaction behavior does not match their income sources. These scenarios are essentially not purely “virtual asset problems,” but customer due diligence and transaction monitoring issues that traditional financial institutions must face.

V. Future regulatory direction: not to prohibit innovation, but to “embed rules.” BIS proposes a very important direction: future tokenized finance should not deviate from the existing trust system, but should introduce tokenization technology into a two-tier monetary system based on central bank currency and regulated institutions. From a compliance perspective, this is essentially four words: rules upfront. More feasible digital financial infrastructure in the future should embed within the transaction process: customer identification, pre-screening of transactions, risk rule judgment, auditable data trails, privacy and data sovereignty protection, and cross-institutional and cross-jurisdictional collaboration mechanisms.

BIS also explicitly states that platforms with licensing mechanisms that can embed AML/CFT pre-screening, list screening, and auditable data trails in their transaction processes are more likely to maintain financial integrity in large-scale scenarios. This is also where compliance technology has real value in the future: not ex-post remediation, but embedding risk control into the process before payments and settlements occur.

Compliance Xiaobai’s observation of this BIS report’s inspiration for compliance professionals is not about “whether stablecoins are good or bad,” but rather: in the future, all new financial tools, as long as they aim to become mainstream payment and settlement tools, must answer compliance questions. Who identifies the customer? Who monitors the transaction? Who handles anomalies? Who bears responsibility? Who ensures consistency of cross-border rules? If these questions have no answers, no matter how advanced the technology, it will only shift the risk to places that are harder to regulate. Therefore, from a compliance perspective, stablecoins are not a simple “crypto topic.” They will affect bank account monitoring, payment institution risk control, cross-border fund flows, virtual asset onboarding, customer risk ratings, and financial crime prevention. The truly valuable direction in the future is not to bypass compliance with technology, but to embed compliance capabilities into technological infrastructure. Compliance is not the opposite of innovation. Compliance is the infrastructure that enables financial innovation to go far.

[compliance Xiaobai]