A group of international banking authorities, the Basel Committee on Banking Supervision, which is part of the Bank of International Settlements, has issued a statement on the current situation of the cryptocurrency market.
While some investment funds and stock exchanges have been quick to adopt the new technology, banks seemed wary of digital assets.
Now, it seems that the attitude towards cryptocurrencies isn't getting any warmer, as one of the biggest and most powerful banking authorities in the world has issued a statement on the matter, warning about the risks currencies-such as Bitcoin-pose to the financial market.
The Basel Committee on Banking Supervision published a document on Mar. 13th, outlining its views on the booming industry.
The newsletter noted that the crypto-asset market is small relative to that of the global financial system, adding that most banks currently have very limited exposures to the market.
According to the document, banks do not view cryptocurrencies as a legal tender and considers them an immature asset class given the lack of standardization and constant evolution.
Banks should be "Wary of the dangers" that come with cryptocurrencies, as they could have a negative effect on the bank's liquidity, credit, operations, money laundering, and terrorist prevention measures, as well as its legal status and reputation.
BIS believes that a "Clear and robust" risk management needs to be implemented in banks in order to deal with the "High degree" risks it described.
"A bank's risk management framework for crypto-assets should be fully integrated into the overall risk management processes, including those related to anti-money laundering and combating the financing of terrorism and the evasion of sanctions, and heightened fraud monitoring," BIS said in the report.
Apart from disclosing any current or planned assets, banks should also present the authorities with an assurance that it has assessed and mitigated the risks connected with owning crypto.
Global Banking Standard Setter Admits Bitcoin and Crypto are a Risk to Banks
Published on Mar 15, 2019
by Cryptoslate | Published on Coinage
Mentioned in this article
Experts are concerned Libra could people's privacy and security at risk
In light of the hype surrounding Facebook's new "Libra" cryptocurrency, it's important to pause and be just as critical of it as other cryptos.
'I Don't Trust Facebook With Anything:' The World Reacts to Facebook's Libra
"We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight."
China's Biggest Payment Firms Have No Plans to Follow Facebook into Crypto
China's internet giants appear unlikely to follow Facebook into the cryptocurrency space anytime soon - though you can be sure they're paying attention.
Regulators Debate Cryptocurrency Legislation Ahead of G20 Summit
Cryptocurrency regulation will take a step forward during the upcoming V20 Summit where country representatives will assess the new course of legal action proposed by the international Financial Action Task Force.