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BIS Study: Stablecoins Slip Past Capital Controls, Deepening Dollarization Risk in Emerging Markets

2026-07-22

A new working paper from the Bank for International Settlements has delivered fresh evidence that dollar-pegged stablecoins are becoming an increasingly effective workaround for one of the oldest tools in a central banker's playbook: the capital control. The paper, titled "Dollarisation and Monetary Control: What Lessons for the Rise of Stablecoins?", was published Tuesday and marks the latest instalment in the Basel-based institution's escalating scrutiny of the sector.

The BIS analyzed stablecoin flows across more than 130 economies and found that stablecoins appear "largely unaffected by either broad or specific capital flow restrictions," as they partly circulate outside the regulatory perimeter. The researchers suggested that foreign exchange restrictions and capital controls — traditional tools governments use to limit money flowing in or out of their countries — are "less effective" against stablecoins than against conventional foreign currency bank deposits.

Cointelegraph's review of the same paper corroborates the core methodology and findings. BIS researchers analyzed foreign-currency deposits and dollar-pegged stablecoin inflows across more than 130 economies, finding that both tend to increase during periods of macroeconomic stress. Unlike traditional bank deposits, however, stablecoin flows showed little response to capital controls or other FX restrictions. The authors said this likely occurs because "stablecoins are partly circulating outside the regulatory perimeter."

Crypto Times, which also reviewed the paper, reported that in a working paper published on Tuesday titled Dollarisation and Monetary Control: What Lessons for the Rise of Stablecoins?, BIS economists analyzed foreign-currency deposits alongside dollar-backed stablecoin inflows across more than 130 economies. The outlet added that the researchers found that while stablecoins and traditional bank dollar deposits often emerge under similar economic conditions, stablecoins are significantly more difficult for policymakers to control because they operate partly outside the traditional financial system.

Crypto.news, citing the same BIS report, detailed the mechanics of why enforcement is so difficult: capital controls have historically reduced some forms of deposit dollarization because banks must enforce domestic rules, but stablecoin inflows were broadly similar in economies with and without such restrictions. Digital tokens have bearer-like features and can be transferred through unhosted wallets, making complete enforcement difficult. The outlet noted that the BIS Annual Economic Report 2026 had already flagged that blocking domestic intermediaries from handling unapproved stablecoins may limit some transactions, but such measures are likely to remain imperfect.

The findings dovetail with the BIS's broader campaign against stablecoins as a monetary instrument. In its Annual Economic Report published in late June, the institution argued that the tokens function more like exchange-traded fund shares than genuine money. As previously reported, the BIS reiterated in its annual report that stablecoins still fall short of money in singleness, elasticity, interoperability, and integrity, which it says are the foundational properties that any monetary system must keep. That report put the global stablecoin market at roughly $320 billion as of the end of May, with the BIS warning that even at a scale of $1 trillion to $3 trillion, wider adoption would still strain bank funding and credit.

Real-world adoption patterns appear to bear out the BIS's concerns. Cointelegraph noted that the trend is already visible on the ground: in its recent analysis of Nigeria, the International Monetary Fund found households and small businesses are using US dollar-pegged stablecoins for cross-border payments, remittances and access to dollar-denominated assets as inflation and currency depreciation bite.

Meanwhile, the market keeps growing regardless of the warnings. Regulators in the U.S., EU, Japan, and other regions are establishing dedicated frameworks to bring stablecoins into the regulated financial system. The total USD stablecoin supply reached $292.6 billion as of Tuesday, up from $253 billion a year earlier, according to The Block's data dashboard — underscoring that even as the BIS raises alarms about monetary sovereignty, dollar-pegged tokens are becoming further entrenched in the global financial plumbing they are accused of circumventing.

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