Quick answer: In its 2022 Annual Economic Report chapter “The future monetary system,” the Bank for International Settlements (BIS) argues that crypto’s weaknesses are structural, not temporary. It lists four: crypto has no nominal anchor of its own, it fragments instead of consolidating, it runs into a scalability trilemma, and its decentralization is partly an illusion. The report’s punchline is that useful features like programmability and tokenisation are “not the preserve of crypto” and can be built on central bank money instead.
Updated 07/17/2026. By Jake Claver. Educational content, not investment advice.
Plenty of people quote the BIS line that tokenisation is “not the preserve of crypto.” Fewer read the argument that leads to it. The chapter (full text also in the BIS PDF) makes a specific claim: the problems it sees in crypto are baked into the design, so they cannot be engineered away by the next upgrade. Whether you agree or not, it is worth knowing exactly what the Bank for International Settlements said, in its own words.
The four flaws the BIS names
The report does not treat crypto as a promising system with bugs. It treats the shortcomings as consequences of the architecture.
1. No nominal anchor
Crypto cannot generate stable value on its own. The report notes that stablecoins exist precisely to “import the credibility” of the central bank’s unit of account. A dollar-referenced token such as USDC is stable only because it points back to the dollar. In the BIS reading, that dependency is the tell: the system borrows its anchor rather than providing one.
2. Fragmentation, not consolidation
Money usually shows strong network effects, where value concentrates on one widely accepted unit. The BIS argues crypto does the opposite and displays a “the more the sorrier” property: as usage grows, congestion and fees rise, which pushes activity onto new blockchains that often cut corners on security. Instead of one settlement asset, you get a proliferating set of them.
3. The scalability trilemma
Permissionless blockchains, the report says, cannot maximize scalability, security, and decentralization at the same time. Keeping validators honest without a central authority requires fees and congestion, which caps throughput. This is why the design struggles to scale the way a national payment system does.
4. The decentralization illusion
The report also questions how decentralized these systems really are, pointing to concentration among governance token holders, reliance on off-chain oracles and exchanges, and intermediaries that sit outside regulatory reach. The rhetoric of no middlemen, it argues, does not always match the plumbing.
What the BIS proposes instead
Having listed the flaws, the report does not conclude that the technology is worthless. It argues the useful parts can live somewhere safer. In its words: “New capabilities such as programmability, composability and tokenisation are not the preserve of crypto, but can instead be built on top of central bank digital currencies (CBDCs), fast payment systems and associated data architectures.” The proposed direction is central bank money at the core, with tokenized deposits, fast payment systems, and multi-CBDC platforms handling cross-border settlement. For readers tracking this in the United States, the Federal Reserve publishes its own payments and settlement research along similar lines.
A caveat: what the BIS did not say
It is easy to stretch this source further than it goes. The BIS did not endorse any particular token, and it did not say that a specific asset such as XRP or XLM “passes” its standards. That is an opinion some commentators hold; it is not a BIS finding. Quoting the report accurately means separating its analysis of monetary structure from anyone’s investment thesis layered on top.
Why stablecoins are central to the argument
The stablecoin point does a lot of work in the chapter. If a token needs to be pegged to a sovereign currency to be usable for payments, then the sovereign currency, and the institution that stands behind it, is still doing the monetary heavy lifting. The 2022 report landed months before and after several high-profile stablecoin and lending failures, which the BIS treated as illustrations of the same structural weakness rather than one-off accidents. The takeaway the authors draw is not that tokens are useless, but that a token’s stability is only as good as the reserves and the credibility behind it.
Tokenization and programmability are not crypto’s alone
This is the part of the chapter that often gets lost. The BIS is enthusiastic about tokenization. Its complaint is about where tokenization sits, not whether it should happen. The report argues that central banks, as issuers of the settlement asset, can support the tokenization of regulated instruments such as deposits, while preserving protections like deposit insurance and regulatory oversight. Programmability and composability, in this reading, are engineering features that can run on top of public money just as easily as on a permissionless chain.
That distinction matters for anyone building in payments or asset settlement, because it separates the technology story from the ideology. You can favor tokenized settlement and still agree with the BIS that the settlement asset should be central bank money.
From the 2022 critique to the unified ledger
The 2022 chapter was not a one-off. The BIS has since developed the idea into a concrete design it calls the “unified ledger.” In a June 2025 announcement, the BIS described bringing tokenized central bank reserves, commercial bank deposits, and government bonds onto a single programmable ledger, integrating messaging, settlement, and reconciliation while keeping central bank money at the core. The through-line from 2022 is direct: keep the trust anchor, adopt the tooling. You can follow the broader body of work on the BIS site.
Why this matters
The BIS is the central bank for central banks, so its framing shapes how regulators think about tokenized money. If you are evaluating a payments or settlement network, this chapter is a useful stress test: does the design solve the anchor, fragmentation, and scalability problems the BIS names, or does it inherit them? That is an engineering and policy question, not a signal about any asset’s price or investment merit, and it is worth keeping the two apart.
Common questions
What is the BIS report that criticizes crypto?
It is the chapter “The future monetary system” in the BIS 2022 Annual Economic Report. It sets out the case that crypto’s limitations are structural and argues that innovation should be grounded in central bank money.
What structural flaws does the BIS identify in crypto?
Four: crypto has no nominal anchor of its own, it fragments as it grows rather than consolidating, it faces a scalability trilemma between scale, security, and decentralization, and its decentralization is partly an illusion given concentration and off-chain dependencies.
Did the BIS say tokenization is only possible on crypto?
No. It said the opposite: programmability, composability, and tokenisation are “not the preserve of crypto” and can be built on central bank digital currencies, fast payment systems, and their data architectures.
Does the BIS endorse XRP, XLM, or any token?
No. The report analyzes monetary structure and does not endorse specific assets. Claims that a token “passes” BIS standards are commentary, not BIS findings.
Why do stablecoins matter to the BIS argument?
Because they show crypto importing stability from outside. A dollar-referenced stablecoin is stable only by pointing back to the dollar, which the BIS reads as evidence that crypto lacks its own nominal anchor.
This content is educational only. It is not tax, legal, or investment advice. Check primary sources and speak with a qualified professional before making financial decisions.
