The Basel committee acknowledged the risk presented by cryptocurrencies to the current banking system. The committee gathered to analyze the impact to ensure that measures are taken both for the regulatory system and the financial system.
The technology is still in its early stages even so it is presenting many threats to the financial system due to its lack of certain qualities that a standard banking system possesses. The market has fluctuating liquidity and many loopholes that can be used to launder cash as well as provide funding for less than legal activities.
This is also affecting banks as the banks are exposed to this kind of trading. The crypto-sphere is quite small now, and as it continues to grow, the risk it presents will only continue to rise.
Another important factor that is damaging banking is the reputation they have. Crypto enthusiasts advertise cryptocurrencies as a tool to get rid of the so-called corrupt banking system. They hope to distribute money equally through the use of a network without an intermediary instead of banks that can print money whenever they need.
This advertisement has been widely successful in bringing a lot of people to the crypto fold, and fears continue to increase as the growth of this technology presents threats to the government issued-money.
Regardless of the image they present, most of the traders are in the sphere to make a much profit as they can from the cryptos.
The committee then proceeded to discuss countermeasures against the effect of these currencies on the banking network. The committee then advised banks to monitor cryptocurrencies and study the threat they pose. Moreover, it suggested that the banks should develop a risk management infrastructure