Crypto expert reacts to the BIS report
With the Bank for International Settlements (BIS) stating that “inherent structural flaws” make crypto unsuitable as a monetary tool, we sat down with Konstantin Shulga, CEO and co-founder of Finery Markets who has offered his analysis.
Q. What are your thoughts on BIS commenting that crypto’s “inherent structural flaws” make it unsuitable as a monetary tool?
“The BIS report, unsurprisingly, focused heavily on the risks associated with cryptocurrencies, given that its contributors were representatives of financial authorities.”
“However, it would have been refreshing to see a more balanced analysis that also acknowledged the potential of these digital assets. Just like any complex and innovative system, the crypto ecosystem comes with its own set of advantages and risks.”
“What’s worth noting is that cryptocurrencies have been around for over a decade and have successfully weathered numerous boom and bust cycles. They have also consistently introduced innovative solutions, demonstrating their ability to overcome challenges mentioned in the report, such as congestion and high costs.”
“Actions speak louder than words, and the widespread adoption of stablecoins is evidence that the current monetary and inter-bank payment system has its own flaws and limitations.
“Digital nomads from all corners of the globe are embracing crypto, and online merchants are accepting payments in it. Payment systems, from startups to industry giants like Mastercard and Visa, are exploring opportunities in digital assets.” “Institutional players of the financial world hailed crypto as a new asset class. “
Q. What needs to happen in order to make crypto seem like a more suitable monetary tool in the eyes of BIS?
“Cryptocurrencies, which are not subject to the same regulations as traditional finance (tradfi) yet, need clear rules and regulations.”
“The key is to adopt such rules that align within the realms of finance, mandatory compliance, and tax authorities. By doing so, we can bring cryptocurrencies into the fold of the financial system and transform them into suitable monetary tools.”
“The report discusses risks to market integrity, consumer protection, and privacy. However, proper financial regulation can significantly reduce these risks.”
“it is important to note that even with regulation, risks cannot be completely eliminated. Even well-regulated banks, with supervisors closely monitoring them, have still made significant mistakes. For example, we observed that some banks recently mismanaged their interest rate risks and ended up collapsing.”
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