Last week, the Bank for International Settlements (BIS) published a bulletin addressing the risks associated with cryptocurrency in light of "the recent high-profile failures of FTX and other crypto firms. ..." Among other things, the bulletin notes the following key takeaways: (1) recent high-profile failures have reignited the debate on the appropriate policy response to address crypto risks, including through regulation; (2) the "shadow functions" enabled by crypto markets share many of the vulnerabilities of traditional finance, and these risks are exacerbated by specific features of crypto; (3) authorities may consider different – not mutually exclusive – lines of action to tackle crypto risks, including containment, regulation or an outright ban; and (4) central banks and public authorities could work to make "TradFi" more attractive, including through innovation with central bank digital currencies (CBDCs).
In other news, the Securities and Exchange Commission (SEC) of Thailand recently issued new regulations requiring digital asset businesses that provide custodial services of clients' digital assets "to establish a digital wallet management system to accommodate efficient custody of digital assets and keys and ensure safety of clients' assets." These new regulations affect the policy and guidelines surrounding digital wallets and include requirements for a "contingency plan in case of occurrence of any event that may affect the management of digital wallets and keys." The new regulations took effect on January 16, 2023.
For more information, please refer to the following links:
- BIS: Addressing the risks in crypto: laying out the options
- Addressing the risks in crypto: laying out the options
- Thai SEC issues rules on management of digital wallets for custody of digital assets and keys
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