The Basel Committee on Banking Supervision has warned banking institutions about the risks associated with crypto assets. The committee is hosted and supported by the Swiss Bank for International Settlements, an organisation owned by 60 central banks.
The Committee states the growth of the crypto industry could potentially “raise financial stability concerns and increase risks faced by banks.” According to the Committee, cryptocurrencies “do not reliably provide the standard functions of money.” It also believes they are not safe enough to be used as a medium of exchange. The Committee also notes no government or public authority backs crypto assets.
The Committee said it believes cryptocurrencies are "extremely" volatile, and that they constitute an “immature asset class.” It points out a number of risks associated with crypto-assets, such as money laundering, terrorist financing, and fraud. Therefore, it expects due diligence from banks who decide to delve into crypto assets. Such a bank should analyse the possible risks, and it “should ensure that it has the relevant and requisite technical expertise” in order to do so.
The Committee also expects such financial institutions to disclose their crypto-asset exposures publicly and inform supervisory authority regarding their plans for those assets.