The Basel Committee on Banking Supervision (BCBS) which is the international banking authority, issued a warning on crypto assets today, March 13 that we are discussing more about in our crypto news below.
The BCBS is a committee of banking authorities that conduct supervision which is supported and hosted by the Switzerland-based Bank for International Settlements (BIS) that is actually an organization consisted of 60 of the largest central banks in the world.
According to the issued statement, the committee warns that the massive growth of he crypto industry could pose a serious threat and to ‘’raise financial stability concerns and increase risks faced by banks.’’ The committee also pointed out that the risks were already here despite the crypto market’s small scale when compared to the entire, global financial system.
The BCBS also made clear that the crypto assets are ‘’unsafe to rely on’’ as a store of value or as a medium of exchange which are the two most important functions of money while actually saying that cryptocurrency is a living contradiction. Providing a list of risks associated with the relations between a bank and a crypto related business, there are the ones that we are most familiar with including money laundering, terrorist financing, hacking and fraud. For that reason, the committee provided another list of the minimum requirements for a bank to be able to operate with crypto-related services.
The committee also pointed out that if a bank decides to work with crypto-related assets, first it should ensure that it has the relevant technical expertise which can bring for the bank to accurately evaluate the risks that come out by using or doing business with crypto assets. The bank should also guarantee a clear and effective risk management framework for an improved protection of the relevant data of the bank.
The bank should also be able to disclose any other crypto-related services together with the usual financing disclosures but most importantly to e complaint with all the general and local regulations.
Back in January, the BIS published a research where they claim that the departing from the Proof-of-work bitcoin system won’t actually solve any major issue that occur by the biggest cryptocurrency. Also, the BIS reported that nearly 70 percent of the global central banks are looking into the benefits of the central bank digital currencies issuance but clear plans for an implementation are still far away and depending on the context and timing.
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