Why Stablecoin Technology Is Considered 'Primitive'?

Adekunle Joshua

As per the BIS's latest study, stablecoins are considered 'primitive' in their current state

The mechanisms employed by stablecoins to uphold their pegs exhibit significant flaws

Therefore, the suggested alternative proposed by the BIS includes relying on reserves or algorithms, favoring the Regulated Liability Network (RLN) model

This model is most commonly utilized by Central Bank Digital Currencies (CBDCs)

In light of these findings, the BIS advises the integration of stablecoins into the existing financial system and urges a collaborative approach.