Global Watchdog Warns Crypto Boom Could Destabilize Finance and Widen Inequality
The Bank for International Settlements (BIS) has issued a new warning about the expanding influence of cryptocurrencies and decentralized finance, stating that the sector has grown large enough to potentially disrupt the broader financial system.
According to the report released on April 15, crypto adoption has reached a scale where regulators must now take investor protection and financial stability far more seriously.
Of particular concern to the BIS is the widespread use of stablecoins, which it describes as the main vehicle for value transfer within crypto ecosystems. The report calls for stricter oversight, including mandatory reserves and redemption guarantees to ensure that stablecoins can maintain their peg during periods of market stress.
This push for tighter regulation comes on the heels of two major legislative efforts in the U.S.—the STABLE Act and the GENIUS Act—both of which aim to set clear standards for stablecoin issuers, focusing on transparency, reserve backing, and anti-money laundering compliance.
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Beyond regulatory gaps, the BIS also addressed a deeper issue: inequality. The report argues that despite crypto’s image as a tool for financial inclusion, recent trends suggest the opposite may be true. Citing trading behavior during the FTX collapse, BIS highlighted how large holders capitalized on panicked retail buyers, effectively shifting wealth upward rather than distributing it more fairly.
While the BIS acknowledges that DeFi and traditional finance share some economic fundamentals, it points out that features unique to DeFi—like automated protocols and composability—require a tailored regulatory approach. The goal, it says, should be to balance innovation with safeguards that protect the broader economy.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.
