The growing ties between stablecoins and the traditional financial system pose risks to financial integrity and financial stability, the BIS said in one of the key takeaways from a bulletin. The BIS also said the use of foreign currency-denominated stablecoins could threaten monetary sovereignty and the effectiveness of current FX regulations, and there is a need for regulatory approaches that are tailored to stablecoins. As for the policy response required by stablecoins, the bulletin said that while regulatory frameworks are often confined to jurisdictional borders, stablecoins transact around the world. A regulatory framework tailored to stablecoins could leverage the information provided by blockchains to combat money laundering and other unlawful activities, the bulletin said. It also suggested that there’s a need for international cooperation and technological neutrality in regulation. “Bespoke frameworks need not imply a reduction in regulatory stringency,” the bulletin said. “On the contrary, since many entities within the stablecoin ecosystem operate without established safeguards, a more restrictive regime may be necessary than in traditional finance, where such safeguards are in place.” The organization suggested that a tokenized unified ledger developed by central banks and public authorities will enhance efficiencies without the shortcomings of stablecoins.