Author: compliance newbie
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 published on June 23, 2026.
From a macro-financial perspective, this report discusses the future monetary system, tokenization, and stablecoins.
However, from a compliance perspective, what it truly reminds us of is:
The issue with stablecoins is not just whether their price will de-peg, but whether they can be integrated into a financial system that is identifiable, monitorable, accountable, and regulatable.
I. BIS is not opposing technology; it 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 reduced reconciliation friction. The report also points out that DLT and tokenization can place assets and funds on programmable ledgers, supporting automation and 24/7 operations.
However, BIS's core argument is:
Money is not a purely technological product.
The reason money can be money is not just because it can be transferred, but because there is an institutional framework behind it:
A common unit of account,
Certainty of redemption at par value,
Liquidity support,
A regulatory and legal framework,
And financial integrity requirements.
This is crucial for compliance professionals.
Because any new payment instrument, once it enters large-scale usage scenarios, will ultimately face the same question:
Who identifies the customer? Who monitors the transaction? Who handles exceptions? Who bears the responsibility?
II. The Compliance Risks of Stablecoins: Not Just Anonymity On-chain
When many people talk about stablecoin risks, their first reaction is "on-chain anonymity" or "wallet untraceability."
But the BIS report articulates it more systematically.
In the traditional financial system, banks and regulated institutions undertake responsibilities such as customer identification, transaction monitoring, suspicious activity reporting, and, where necessary, stopping or recalling payments. In contrast, stablecoins primarily circulate on public, permissionless blockchains. Pseudonymity, non-custodial wallets, cross-chain bridges, and mixing tools can all weaken KYC and AML/CFT controls.
This means stablecoins pose not a single-point risk, but a combination of risks:
Who the customer is may not be clear;
The origin of funds may not be fully known;
The purpose of the transaction may not be explainable;
After cross-chain transfers, the path may become fragmented;
When problems arise, the liable entity may also be unclear.
Therefore, for compliance departments, they should not just ask:
"Is this address risky?"
They should ask more importantly:
Why does this customer want to use stablecoins?
How do funds move between stablecoins and fiat accounts?
Who are the counterparties?
What is the relationship between wallets, trading platforms, and payment institutions?
Is the fund flow 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, so they are more transparent.
This statement is only half true.
On-chain data is indeed visible, but "address visibility" does not equal "identity visibility."
"Transaction path visibility" also does not equal "clear transaction purpose."
BIS also mentions that blockchain analytics companies are already supporting law enforcement, and some stablecoin issuers have frozen specific on-chain addresses, indicating that on-chain technology can indeed aid risk identification.
But BIS also emphasizes that these measures cannot replace daily, large-scale AML/CFT controls.
True compliance is not about buying a tool; it's about establishing a closed loop:
Can virtual asset exposure be identified before customer onboarding?
Can on-chain and off-chain fund flows be monitored when transactions occur?
After a risk hit, can a manual review and explanation be conducted?
After forming a suspicious lead, can it be documented, escalated, and reported?
After adjusting models and rules, can they be audited and reviewed?
Technology is just one link in the compliance chain, not compliance itself.
IV. Stablecoins Bring "On-chain Risk" Back to Traditional Finance
The BIS report mentions that as of the end of May 2026, the stablecoin market capitalization was approximately $3.2 trillion; estimated annual transaction volume in 2025 was around $28 trillion. However, after excluding transfers between wallets of the same entity, the actual economic significance would be much lower.
These numbers indicate one thing:
Stablecoins are already large enough that they cannot be ignored by compliance departments;
But they are not yet mature enough to completely replace the existing financial system.
More importantly, stablecoin risk does not remain on-chain.
It re-enters traditional financial institutions through on/off-ramps, trading platforms, payment institutions, trade scenarios, cross-border settlements, and customer accounts.
For example:
Customers frequently use bank accounts to fund virtual asset platforms;
Corporate clients claim to engage in cross-border trade, but funds ultimately flow through stablecoin channels;
Personal customer accounts receive large sums from strangers and then purchase virtual assets in bulk;
Customers explain the activity as "investment," "settlement," or "currency exchange," but the transaction behavior does not match the source of income.
These scenarios are not simply "virtual asset issues"; they are fundamentally customer due diligence and transaction monitoring problems that traditional financial institutions must confront.
V. Future Regulatory Direction: Not Prohibiting Innovation, but "Embedding the Rules"
BIS proposes an important direction:
Future tokenized finance should not detach from the existing trust framework. Instead, tokenization technology should be introduced into the two-tier monetary system based on central bank money and regulated institutions. From a compliance perspective, this essentially boils down to four words: rules first. A more viable future digital financial infrastructure should embed in the transaction flow: customer identity verification,
Transaction pre-screening,
Risk rule assessment,
Auditable data trails,
Privacy and data sovereignty protection, and cross-institution, cross-jurisdiction collaboration mechanisms. BIS also explicitly states that platforms with permissioned mechanisms, if they can embed AML/CFT pre-screening, list screening, and auditable data trails into the transaction flow, are more likely to maintain financial integrity in large-scale scenarios. This is also where compliance technology will truly add value in the future: not remediating after the fact, but embedding risk controls into the process before payment and settlement occur.
Compliance Newbie Observation
The inspiration this BIS report offers to compliance professionals is not "whether stablecoins are good or bad," but rather:
In the future, all new financial instruments, if they wish to become mainstream payment and settlement tools, must answer compliance questions.
Who will identify the customer?
Who will monitor the transaction?
Who will handle exceptions?
Who will bear the responsibility?
Who will ensure cross-border rule consistency?
If there are no answers to these questions, even the most advanced technology merely shifts risk to places harder to regulate.
Therefore, from a compliance standpoint, stablecoins are not a purely "crypto industry topic."
They affect bank account monitoring, payment institution risk control, cross-border fund flows, virtual asset access, customer risk rating, and financial crime prevention.
The truly valuable direction for the future is not using technology to bypass compliance,
But embedding compliance capabilities into the technological infrastructure.
Compliance is not the opposite of innovation.
Compliance is the infrastructure that determines how far financial innovation can go.
