Central Banks Want Crypto 'Contained’
Alarm bells failed to spook resilient markets as Bitcoin climbed above $88,000
The Bank for International Settlements, often called the "central bank of central banks," published a report on April 15 calling for the "containment" of cryptocurrency risks.
The BIS report, titled "Cryptocurrencies and Decentralised Finance: Functions and Financial Stability Implications," declared that cryptocurrencies and DeFi have "reached a critical mass," now posing potential threats to global financial stability.
Yet cryptocurrency markets appear unfazed, with Bitcoin showing a 2.4% daily gain and recovering more than 15% from its April 9 low of around $75,000.
The BIS report represents a significant shift in how traditional financial institutions view digital assets. Rather than dismissing cryptocurrencies, the report acknowledges their staying power while emphasising the need for regulatory guardrails.
"In terms of prudential regulation, the objective is to make sure that the risks that may be generated by crypto and DeFi do not spill over to crucial parts of TradFi and the real economy," the report stated, using industry shorthand for traditional finance.
The BIS identified several specific concerns:
Growing connections between crypto and traditional finance through Bitcoin ETFs
Tokenisation of real-world assets bringing blockchain technology deeper into conventional markets
Information asymmetries despite crypto's transparent structure
Potential wealth transfers "from the poorer to the wealthier" during market stress
The report explicitly notes that an outright ban would not be "either desirable or feasible."
The BIS also advocates for applying traditional financial regulations to the crypto sector, including:
Know-your-customer (KYC) requirements
Disclosure mandates
Professional qualification standards for operators
The report drew immediate criticism from cryptocurrency industry leaders.
Christopher Perkins, President of CoinFund, called the BIS recommendations "completely uninformed and frankly, dangerous," arguing they would "cause, and not mitigate, the systemic risk they sought to prevent.
"Crypto is not communism, It's the new internet that provides anyone with a connection access to financial services. You cannot control it anymore than you control the internet," Perkins stated on X.
Michael Egorov, founder of Curve, was more blunt, simply stating: "Boycott this sh-t."
So far, there has been no indication of immediate regulatory action following the BIS report. The document appears to be influencing the discourse around crypto regulation rather than triggering immediate market changes.