Global banking regulators are speaking out about cryptocurrency, saying it should be governed by the strictest rules in the interest of stability.
Cryptocurrencies are rising in popularity and value, with companies the world over rushing to adopt them. El Salvador became the first country to adopt Bitcoin as legal tender, earlier this week, further adding to crypto’s rise.
Many others, however, are less enthused and see crypto as a potential threat to the stability of the financial sector. According to The Guardian, the Basel Committee on Banking Supervision — made up of regulators from the world’s leading financial institutions — want a “new conservative prudential treatment” to ensure banks have enough capital to cover any and all losses they may suffer in the crypto market.
“Crypto-assets have given rise to a range of concerns including consumer protection, money laundering and terrorist financing, and their carbon footprint,” the Basel Committee said. The committee added that the “growth of crypto-assets and related services has the potential to raise financial stability concerns and increase risks faced by banks.”
The Basel Committee’s stand is a blow against crypto, and echoes the thoughts of JPMorgan CEO Jamie Dimon, who warned people to “stay away from it.” Like Dimon, the Basel Committee had a softer view of stable coins, viewing them as less volatile.