19th August 2025 > > Stablecoins & BIS.

tl;dr

Japan is set to enjoy the world’s first Yen stablecoin. The BIS does what it does best – it lets itself down once again.

Market Snap 

Market Wrap

A surprisingly weak start to the week for reasons that are unclear to me at the moment. What have I missed?

Occasional Series – Dawn Butler, MP for Brent East

… has announced her intention to stand as her party’s candidate at the next London Mayoral election. This is the most pleasing political news of the year so far.

Curious Cryptos’ Commentary – Yen stablecoin

JPYC Inc., a fintech firm based in Tokyo, is applying for a money transmitter license with the intention of launching the first Yen stablecoin, thrillingly called JPYC. This will be a true stablecoin backed greater than 1:1 with cash, and cash-like instruments (short-dated government bonds) which are highly liquid. With proper measures in place, total transparency, and regular audits, such stablecoins will only ever vary by tiny amounts from the underlying currency.

Note that algorithmic stablecoins – such as those underpinning the ENA and SKY ecosystems – are destined to crash and burn one day, destroying a lot of investors’ wealth in the process. Calling the algorithmic version a stablecoin is straight out of the playbook described in 1984, for there are times when they are anything but stable. Just ask the previous holders of UST (TerraUSD) and LUNA about their experience in May 2022, colloquially known as the Terra Fiasco. Co-founder and CEO of Terra Labs, Do Kwon, was apprehended leaving Montenegro on a false passport in 2023 and was very recently convicted of charges of conspiracy to commit fraud and wire fraud in a US court. Faced with 12 to 25 years in prison, Kwon has his rightful comeuppance. I would be a touch nervous if I was an executive at either of the two organisations responsible for ENA or SKY.

The regulation and adoption of stablecoins globally is a key driver of the crypto revolution that is underway today.

Curious Cryptos’ Commentary – Bank of International Settlements (BIS)

The BIS is a regular bogeyman in these pages, and for good reason.

Described as the central bankers’ bank, it is little more than a glorified talking shop allied with some unsavoury political objectives, not least of which is its ferocious desire for CBDCs, the choice tool of oppression for dictators worldwide.

Headquartered in Basel, Switzerland, BIS is one of those supranational organisations funded by taxpayers that serves no obvious purpose. It employs vast numbers of people on large, tax-free salaries, who cannot be fired except in extreme situations, the fattest tax-free pensions, expense accounts that put the GDP of small countries in the shade, and almost certainly insists that all employees WFH at least four days a week.

…

A recent report by the BIS on the topic of stablecoins is a flagrant exercise in distorting the truth to try to justify its worldview of cryptos:

https://www.bis.org/publ/bisbull108.pdf

Don’t get me wrong, I am all for robust and effective regulation of cryptos and stablecoins in particular, but that isn’t the purpose of this piece of propaganda circulated by the BIS.

There is the usual guff about money laundering, and terrorism financing, as if these activities are only enabled by cryptos and not the fiat system. I guess we should be pleased that the environmental angle has been dropped now, having been proven false all along.

The BIS appears to be concerned that stablecoin issuers are amongst the largest owners of treasury bonds, a concern which is much overblown. Increasing demand for treasuries has a dampening effect on yields, making the cost of borrowing for governments lower than it would otherwise be. Given all governments’ utter inability to exercise any spending restraint at all, even a small reduction in interest rates helps slow down the death spiral of ever-increasing debt to pay the interest on that ever-increasing debt.

Laughably, the BIS claims that the volatility inherent in stablecoins is greater than that of BTC or stocks:

You can see what it is doing there – claiming equivalence between algorithmic stablecoins and fiat-backed stablecoins, which is nonsense. The same goes for crypto-backed and commodity-backed stablecoins. There is no regulator anywhere in the world that will ever approve any stablecoin unless it is fiat-backed. The time period also includes the days when USDT included crypto-related loans to Chinese companies, introducing correlation risk where it has no right to be. Given the various market shocks since 2019, such a poorly designed stablecoin would exhibit volatility against its peg. But the world has moved on, and we will not see the like again. The authors of this report know all of this to be true, but still they obfuscate, in the hope of misleading us down a path away from cryptos, and into the arms of privacy denying CBDCs.

Once again, as reliably as always, the BIS lets itself down. What a waste of our money.