The need to bring the crypto industry under a regulatory framework has become a top priority for financial regulators around the world. Officials at the Bank for International Settlements (BIS) have proposed three crypto rules for consideration by those working on drafting legislation surrounding the digital assets industry. The goal of these potential crypto rules is to eliminate the sector of associated risks, including volatility and the possibility of being anonymously exploited by malicious users for illegal activities such as hacking and asset theft.
“Ban certain crypto activities” is the first proposal the BIS has made about a official blog post. While the BIS did not name the species crypto activities that should be banned, certain crypto activities have recently attracted the attention of global regulators. The use of crypto mixers like Tordano Cash, for example, has angered financial regulators to ban their use. Scammers who steal crypto assets usually funnel their stolen assets into anonymous wallets after sharing them through crypto mixers.
However, the BIS has identified some problems that could arise ban crypto Activities. “The extreme option is a total or targeted ban on crypto activities. Implementing this option would face the challenge of enforcement,” the blog reads.
Isolate crypto activity from traditional finance (TradeFi) Mechanisms were listed as the second suggestion by BIS economists. Separating crypto from existing stock-trading-like features would make it more niche and exploreable by fewer people, they said.
This worries a number of nations cryptocurrenciesthat can instantly enable large-scale and cross-border payments could emerge as an alternative to fiat currencies and eventually rock global financial systems.
Actually, Raghuram Rajanthe former Reserve Bank of India governor recently said that crypto players must refrain from promoting these assets as an “inflation-resistant” alternative to existing fiat currencies.
“Contain crypto so it remains more of a niche activity. This could be done primarily by limiting the flow of money in and out of TradFi and by limiting other connections with TradFi. At the same time, the containment would attempt to curb any links to the real economy (as a means of payment for goods and services or in response to the tokenization of real assets),” the post said.
Regarding the latest proposal, the BIS has reiterated the importance of global financial regulators formulating it crypto laws similar to those currently governing traditional financial organizations.
Mandating KYC requirements and ensuring crypto firms notify authorities of suspicious transactions are some laws that could be enforced across the crypto sector, among others. “Some companies lack basic accounting, corporate governance and compliance. and control functions that are a prerequisite for participation in TradeFi. Some intermediaries bridging TradeFi and crypto may be regulated,” the BIS contributor added.
The European Union (EU) has already done so authorized the long awaited MiCA legislation that would work uniformly across all member states in terms of crypto laws.
India also works with other member states of the G20 group To formulate crypto laws that would work on an international scale. Japan and Germany have joined India in demanding global rules for crypto.
