The BIS concludes that, despite their cross-border structure, crypto currencies are not immune to market reactions to national regulatory news. The BIS identifies three key challenges for international regulatory efforts.
The first is to clarify responsibilities
“First, in order to effectively address regulatory issues and achieve technology-neutral regulation, regulators need to clarify crypto currency-related activities from a legal and security-related market perspective, according to economic benefits and not according to the technology used. In this context, the boundaries between national regulators may need to be redrawn in order to clarify responsibilities”.
International coordination of the authorities is the second challenge facing the regulators. This has already proved its worth in the fight against money laundering and should also be the approach to cryptoregulation:
“[…] although markets are currently rather segmented, cross-border spillovers can occur in response to regulatory events. […] It has already been noted that coordination improves the effectiveness of AML standards, with authorities trying to treat similar products and services uniformly according to their functional and risk profile in all jurisdictions.”.
New regulatory boundaries
“Dirty child” Bitcoin could sully financial systems. Finally, the BIS points out that new cryptofinancial products will increase the macroeconomic impact of digital assets. The more points of contact there are between the crypto and the conventional financial economy, the greater the danger for the latter that a loss of confidence in Bitcoin & Co. could also affect them:
“Novel crypto products such as crypto funds and derivatives on crypto currencies and crypto assets create additional links to the financial system. A loss of public confidence in crypto-asset markets could lead to distrust of the broader financial system and its supervisory authorities. […] While crypto-assets therefore do not pose a global risk to financial stability at this point, it is important to remain vigilant, monitor developments and respond to potential threats.”
The fact that a damaged trust in the conventional financial system was one of the main reasons for the emergence of Bitcoin is generously ignored here. It is not for nothing that most crypto currencies are referred to as systems that largely manage without the “trust” factor. Apart from the trust in cryptography.
ABOUT CHRISTOPHER KLEE
Christopher KleeChristopher Klee studied Literature, Media and Computer Science at the University of Konstanz. Since 2017, Christopher has been working on the technical and political effects of the cryptoeconomy.