The war on crypto continues unabated as global securities, derivatives, and financial trade associations wrote a joint letter to the Bank of International Settlements (BIS) complaining that the rules for banks becoming involved with crypto companies were too strict.
The letter from these associations pointed out that the underlying technology for cryptoassets “make it possible to deliver financial services more quickly, securely and at lower cost.”
“That type of economic efficiency would lead to tangible benefits for the real economy and it is critical, from a public policy perspective, that these benefits are able to be delivered by financial institutions within the regulatory perimeter.”
The letter also pinpointed the speed and transparency with which transactions are carried out, the ability to swap and record assets and cash simultaneously, the mitigation of counterparty, liquidity, and settlement risk, would all lead to lower transaction costs and facilitate a more competitive marketplace.
The associations involved in the letter to the BIS include the GFMA for the securities sector, the ISDA and the FIA for the derivatives associations, the Institute for International Finance (IIF) and the Chamber for Digital Commerce among others.
However, the Bank of International Settlements (BIS) published a consultation paper in June this year, whereby it was proposed that banks getting involved with cryptoassets would have to comply with prohibitively heavy capital requirements.
In short, the banks would be far more unlikely to integrate crypto products given that the BIS proposal would make it economically prohibitive to do so.
Once again, the incredible innovation to be found in the crypto sector is being stymied and blunted at every turn by supremely powerful institutions that worry about being side-lined by such a lean and transformative industry.
Given the BIS previous history of anti-cryptocurrency sentiment these associations will possibly be banging their heads against a wall. Many decades of influence over financial affairs has helped the central banks to become entrenched as the door keepers to the financial system. Given the appalling state of global economies though, change must be allowed to take place.