Circle Internet (CRCL) shares retreated 7% in pre-bell trading Tuesday after the Bank for International Settlements warned about the risks posed by stablecoins and urged countries to accelerate efforts to tokenize their own currencies.

Stablecoin is a type of cryptocurrency designed to maintain a constant value, backed by real-world assets such as fiat currencies, government bonds, or gold. According to Reuters, US dollar-pegged stablecoins account for 99% of the market.

The BIS expressed concerns that stablecoins could undermine monetary sovereignty, lack transparency, and trigger capital flight from emerging economies.

"Stablecoins offer some promise on tokenization but fall short of requirements to be the mainstay of the monetary system when set against the three key tests of singleness, elasticity and integrity," the BIS said Tuesday.