BIS economists recommend 3 crypto policies for regulators worldwide to adopt – Regulation

Economists at the Bank of International Settlements (BIS) have recommended three policies that regulators worldwide could adopt to deal with the risks of cryptocurrencies. “Authorities can now consider a variety of policy approaches while working to improve the existing monetary system in the public interest,” they advised.

BIS economists discuss crypto guidelines

The Bank for International Settlements (BIS) published a bulletin last week titled “Addressing the risks in crypto: laying out the options.”

The report, authored by BIS economists Matteo Aquilina, Jon Frost and Andreas Schrimpf, discusses the risks associated with cryptocurrencies and the various options available to regulators and central banks to address these risks.

The authors outlined “three possible lines of action.” The first is to “prohibit certain crypto activities.” Another option is to “isolate crypto from Tradfi [traditional finance] and the real economy.” The third is to “regulate the sector in a similar way to Tradfi”. However, the report clarifies that the three options are not mutually exclusive and “could be combined selectively to mitigate the risks posed by crypto activities.”

While BIS economists noted that crypto markets have “experienced a remarkable series of booms and busts, often resulting in large losses for investors,” they concluded that “these failures have not yet spilled over into the traditional financial system or the real economy.” Nevertheless, they warn:

There is no guarantee that they will not do so in the future as defi (decentralized finance) and tradfi become increasingly intertwined.

“Authorities can now consider a variety of policy approaches while working to improve the existing monetary system in the public interest,” the BIS report concludes.

What do you think of the BIS economists’ crypto policy recommendations? Let us know in the comments section below.

Kevin Helms

As a student of Austrian economics, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects, and the interface between economics and cryptography.

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