‘Electronic Money is not communism’ — Exec criticizes BIS's view on electronic money

The head of a blockchain investment firm has warned that the efforts of the Bank for International Settlements (BIS) to isolate the crypto market and their controversial recommendations regarding DeFi and stablecoins could pose a danger to the entire financial system.

Chairman of CoinFund, Christopher Perkins, criticized in a post on X on April 19 that many of the recommendations and conclusions of BIS – perhaps due to a combination of fear, arrogance, or ignorance – are completely lacking in information and truly dangerous.

He referred to the BIS report dated April 15 titled "Cryptocurrency and Decentralized Finance: Function and Impact on Financial Stability."

BIS's recommendations could expose the traditional financial system (TradFi) to unimaginable scale risks. Perkins rebutted BIS's call for a "restraining" approach to isolate cryptocurrencies from traditional finance and the broader economy. He emphasized: "Cryptocurrency is not communism. This is a new internet, giving anyone with a connection access to financial services. You cannot control it more than you control the internet."

Perkins warns that a restrictive approach to cryptocurrency could expose the traditional financial system to significant liquidity risks, especially when the crypto market operates continuously 24/7, while traditional financial markets close after trading hours.

"If implemented, they will create – rather than mitigate – the systemic risks that they seek to prevent."

The BIS report warns that the number of investors and the amount of capital in the crypto market and DeFi have reached a significant level, making investor protection a major concern for regulators. Perkins counters the claim that DeFi poses significant challenges, instead arguing that it is a significant improvement over the opacity and imbalances of the traditional financial system.

Regarding BIS's concerns about the anonymity of DeFi developers, Perkins questioned its relevance:

"Sorry, but when was the last time a traditional financial company announced its list of developers? Public companies may provide a level of openness and transparency, but they seem to be gradually replaced by private markets."

Perkins also criticized BIS's concerns about stablecoins that they could lead to macroeconomic instability in countries like Venezuela and Zimbabwe.

"If there is a demand for USD stablecoins and it helps improve the conditions of anyone in the developing world, perhaps that is a good thing."

Perkins is not the only one criticizing this controversial report. Lightspark co-founder, Christian Catalini, also made a series of criticisms on X the same day. Catalini summarized the report with a metaphor:

"Think of writing parking regulations for a self-driving drone fleet – a serious job, but two steps behind in technology."

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making any decisions. We are not responsible for your investment decisions.

Mr. Giáo