Kevin Helms
Kevin, an Austrian economics student, discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects, and the intersection of economics and cryptography.
Economists at the Bank for International Settlements (BIS) have suggested three policies global regulators could adopt to address the risks posed by cryptocurrencies. “Authorities can now consider various policy approaches while working to improve the existing monetary system in the public interest,” they suggested.
BIS Economist Discusses Cryptocurrency Policy
The Bank for International Settlements (BIS) published a bulletin last week titled “Addressing Risks in Cryptocurrencies: Listing Options.”
Authored by BIS economists Matteo Aquilina, Jon Frost and Andreas Schrimpf, the report discusses the risks associated with cryptocurrencies and the various options available to regulators and central banks to address them.
The authors outline “three potential courses of action.” The first is “Prohibition of specific encryption activities.”Another option is to “segregate crypto from tradfi [traditional finance] and the real economy. The third is to “regulate the industry in a tradfi-like manner.” However, the report clarifies that the three options are not mutually exclusive and can be “selectively combined to mitigate the risks posed by crypto activities.” “.
While noting that crypto markets “have experienced a series of notable booms and busts, often resulting in large losses for investors,” the BIS economists concluded that “these failures have so far not spilled over into traditional financial systems or entities economy.” Still, they warn:
There’s no guarantee they won’t do this in the future as defi (decentralized finance) and tradfi become more intertwined.
The BIS report concluded: “Authorities can now consider a variety of policy approaches while working to improve the existing monetary system in the public interest.”
What do you think of BIS economists’ cryptocurrency policy recommendations? Let us know in the comments section below.
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