Bank for International Settlements (BIS) Makes Statement About Bitcoin and Cryptocurrencies

Bank for International Settlements (BIS), bitcoin and cryptocurrencies He argues that after a particularly eventful year on

According to the report on addressing risks in crypto released Thursday, the global group of central bankers has also presented an alternative to “promoting healthy innovation” with Central Bank Digital Currencies (CBDC).

Bank for International Settlements (BIS) Presented 3 Separate Scenarios for Cryptocurrencies

The BIS outlined the advantages and disadvantages of each of the three approaches, noting that they can be mixed and combined to apply to the different risks they see. Ongoing events related to the collapse of FTX and the collapse of stablecoin TerraUSD were the main events mentioned.

Without “gateways” like centralized exchanges, “cryptocurrency will have to rely on users to self-store their funds in digital wallets using private keys,” the report said.

According to the authors of the report, it was claimed that without the mediation of centralized exchanges, a mainstream adaptation would not be possible given the risks of private keys.

Banning cryptocurrencies would be an “overkill” option, according to the BIS, and would also limit innovation. The BIS also acknowledged that it would be difficult to ban any borderless decentralized finance (DeFi) sector.

Banning centralized intermediaries may be more effective, according to BIS representatives, but in this case, such financial activities would shift to other countries.

Other options might be to isolate crypto from traditional financial economies and organize the industry in a similar way to the financial services industry.

*Not investment advice.