International Payments Bank (BIS) published the new Bitcoin and crypto currency report: warned!

The International Bank of Payments (BIS), which is generally referred to as the “Central Bank of the Central Banks, has warned that the crypto currencies and the decentralized finance (defi) growth have reached a“ critical mass ve and now pose systemic risks for traditional finance.

BIS Report, although the crypto market is largely isolated from the traditional financial institutions (tradfi), Spot Bitcoin He says that the latest developments, such as the approval of ETFs and the rise of the real world asset (RWA) tolens, deepen the connection between the two sectors. The report notes that these developing connections require more attention and tighter supervision.

Perhaps the most striking one is the analysis of how the financial shocks in the crypto markets of BIS can increase the inequality of reserve. A graphics in the report show that during the market stress periods, small individual investors tend to increase their crypto exposure, while richer investors come out of the market. According to BIS, the conclusion is the kown redistributing of the richest to the richest from the poor ”.

This observation also coincides with the concerns expressed by other regulators. For example, Ulrich Bindseil of the European Central Bank (ECB) argued that the structure of Bitcoin had previously benefited at the expense of those who were usually wealthy early adopted early and late.

The BIS report summarizes two important developments that accelerate the rapprochement of defi and traditional finance. The first of these is the decision to approve the Spot Bitcoin ETFs of the US Securities and Stock Exchange Commission (SEC) in January 2024. This move made significant easier to expose corporate and individual investors to crypto through traditional financial channels.

Second, it is the ongoing expansion of the tokenized real world assets. Defi is first of all, while tokening of assets such as bonds, stocks and real estate, while returning around crypto -specific beings, is preparing to bring the main current financial tools to block chain platforms. This may lead to more widespread use of decentralized stock exchanges (DEXs) by tradfi institutions.

BIS advocates a “limitation” approach to reduce potential risks. This includes the fact that defi protocols are compatible with the regulatory frameworks already applied to tradfi organizations. The report proposes the implementation of the rules of diagnostic (KYC), developed information requirements and decentralized protocols to create legal responsibilities for operating.

*It is not an investment advice.