The stock of stablecoin issuer Circle (CRCL) has witnessed a significant drop, plummeting 15% after reaching an all-time high of $299 earlier this week. The decline has raised concerns as the shares are now approximately 25% below their peak value. However, they remain over 600% higher than their initial public offering (IPO) price earlier this month.

A report from the Bank for International Settlements (BIS) published on Tuesday criticized the use of stablecoins, highlighting the potential risks they pose to financial stability and monetary sovereignty in the absence of effective regulations. The BIS argued that these digital tokens cannot assure a stable value relative to centralized currency and may struggle during periods of financial stress, lacking mechanisms to prevent illicit financial activities.

Instead, BIS advocates for the tokenization of central bank reserves and other safe assets, indicating that stablecoins could occupy a supportive role in the financial ecosystem if regulated appropriately.

In recent months, firms like Stripe, Mastercard, and PayPal have begun developing stablecoin-related services to complement traditional banking systems, showcasing the increasing adoption of this technology for transactions globally. Over the last month, stablecoins have facilitated transactions totaling $4 trillion, per Visa data.

Circle is responsible for the USDC stablecoin, which is currently the second largest in the market with a supply of approximately $61 billion, trailing Tether, which has a supply of $156 billion.