Tether CEO challenges BIS preference for tokenized deposits

Tether CEO Paolo Ardoino is challenging the Bank for International Settlements (BIS) regarding the future of digital money. Ardoino argues that fully reserved stablecoins provide a safer alternative to tokenized bank deposits, which rely on fractional reserve banking. He contends that stablecoins backed by highly liquid assets, such as U.S. Treasuries, offer superior security for savers.

In response, BIS General Manager Pablo Hernández de Cos expressed concerns that stablecoins lack essential qualities for large-scale use, including redeemability at par, interoperability, financial integrity, and the protection of monetary sovereignty. The BIS advocates for tokenized deposits that remain liabilities of commercial banks to preserve the existing financial structure.

Separately, data from Anchorage Digital Bank shows that Tether’s U.S.-regulated stablecoin, USA₮, maintained a surplus of approximately $660,000 as of July 31. The reserves for the 175.25 million USA₮ tokens in circulation consist of U.S. dollar cash and reverse repurchase agreements secured by U.S. Treasuries.