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BIS Analyst Short-Lists Crypto Guidelines To Be Embraced By Global Regulators

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Jan 22, 2023

BIS’s Concerns over Crypto Regulation

Economists worldwide are not only concerned with the existing interest and inflation rates.

In fact, they are also concerned with crypto regulations which is why global economic institutes are recommending immediate attention to this issue.

Global institutes calling for crypto regulations are the World Bank, IMF, Worldwide Central Banks, and Bank of International Settlements (BIS).

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Recently, an economist at BIS has short-listed three crypto guidelines and regulations which the economist believes must be adopted by worldwide regulators.

These guidelines and regulations may help global regulators tremendously in tracking down activities involving cryptocurrencies.

They will be able to track other aspects that involve cryptocurrencies, which is going to be a great opportunity for the regulators.

They will be able to ensure that the investors in their jurisdictions are interacting with the right kind of crypto firms and assets. This way, they can secure their funds and personal data.

BIS Economists Deliberate Upon Crypto Guidelines

Digital assets are often disregarded on the assumption that they pose unavoidable risks and hence regulations are necessary, said BIS’s economists.

For addressing the long pending issue of crypto regulations, the economists at BIS have compiled a report. The report is in the shape of a bulletin which is titled “Addressing the risks in crypto: Laying out the options”.

The report was published last week and was authored by top economists of BIS namely Matteo Aquilia, Andreas Schrimpf, and Jon Frost.

Salient Features of BIS’s Report on Cryptocurrency Regulations

First of all, the report conducts a deep-rooted in-depth analysis of cryptocurrencies and the potential risks associated with them.

Thereafter, the report discusses several options that worldwide regulators, such as central banks, have for dealing with such risks.

First Course of Action

At least three courses of action have been proposed with regard to adoptable crypto regulations by worldwide regulators.

The first course of action proposed by BIS’s economists is that worldwide regulations must first identify crypto activities.

Once the activities have been identified, the regulators must determine which activities are allowed and which are to be banned.

Second Course of Action

As regards the second option, the economists at BIS have proposed that cryptocurrencies should be separated.

What they actually meant was that cryptocurrencies should be isolated from the conventional/traditional financial system. In this manner, the traditional financial system can work smoothly without any fears from the crypto industry.

Similarly, they have further proposed in the second option to separate the crypto economy from the real economies.

Third Course of Action

As a third option, economists at BIS are of the view that worldwide regulators should regulate the crypto industry in the same manner as traditional finance.

However, the three economists are of the unanimous view that the three courses of action are exclusive.

They are of the further view that proposed options can be adopted separately or collectively to eliminate risks emerging from crypto activities.

Additional Crypto Issues Addressed

BIS’s report also discusses and deliberates upon further issues emanating from crypto activities. For instance, the report takes note of serious events containing surges and downturns in the crypto market.

The economists pointed out that because of frequent downturns, investors have been suffering huge losses.

They then advised that none of the failures in crypto markets have so far impacted or influenced the traditional financial system.

They further acknowledged that not even any adverse impacts were brought upon economies by failures in crypto markets.

Nevertheless, BIS’s economists did warn caution while dealing with the digital asset industry. They advised that though currently no dangers could be foreseen now their probability in the future cannot be underestimated.

In the end, the report observed that regulators are well-equipped to consider a wide range of policies. The regulators’ focus should be to better the current monetary system while keeping in mind the greater public interest.

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