BIS: Cryptocurrency has become a means of transferring wealth from the poor to the rich during market crises

Odaily Planet Daily News The Bank for International Settlements (BIS) released a paper exploring the financial stability risks of cryptocurrencies and decentralized finance (DeFi), which pointed out that although it is generally believed that cryptocurrencies have little connection with traditional finance (TradFi), with the issuance of Bitcoin ETFs, the expansion of stablecoins, and the continuous development of tokenization of real-world assets (RWA), the size of the cryptocurrency market has reached a critical point that triggers financial stability risks. In addition, the BIS report also pointed out that small investors usually increase their cryptocurrency exposure during market crises, while "rich" investors withdraw, so it is concluded that the cryptocurrency market has become a means of transferring wealth from the poor to the rich. The BIS report recommends that DeFi should implement similar regulatory requirements as TradFi, including "know your customer" compliance constraints, information disclosure, and adequate training and qualification certification for market professionals. (LedgerInsights)