BIS "Virtual assets and DeFi threaten financial stability... Wealth transfer from poor to rich"

Minseung Kang

Summary

The Bank for International Settlements (BIS) diagnosed that virtual assets and decentralized finance (DeFi) could introduce new risks to the financial system as they expand their intersection with traditional finance.
It stated that the situation in the virtual asset market is changing with the approval of spot Bitcoin ETFs, the growth of stablecoins, and the tokenization of real-world assets (RWA).
BIS warned that wealth transfer from the poor to the rich is occurring in the virtual asset market.

The Bank for International Settlements (BIS) recently diagnosed that virtual assets (cryptocurrencies) and decentralized finance (DeFi) could introduce new risks to the overall financial system as they expand their intersection with traditional finance.

According to Ledger Insights, a virtual asset specialized media, BIS stated in a research report on the 19th that "In the past, the small size of the virtual asset market limited its impact on the entire financial market, but now the situation is changing with the approval of spot Bitcoin ETFs, the growth of stablecoins, and the tokenization of real-world assets (RWA)."

Furthermore, it emphasized, "Before traditional financial institutions expand their connections with DeFi, it is necessary to apply existing financial regulations, such as Know Your Customer (KYC), equally."

Meanwhile, the report warned, "In times of crisis, small investors tend to invest more in virtual assets, while large investors tend to withdraw funds," adding, "Ultimately, the virtual asset market could become a channel for wealth transfer from the poor to the rich."