21 Mar 2019
Banks should be wary of the risks posed by virtual currencies and other crypto-assets despite the sector’s limited exposure to the markets, the Basel Committee said.
While markets for crypto-products have grown in recent years, virtual currencies do not yet provide the “standard functions of money” and investments in the sector remain exposed to volatility, the banking watchdog group said in a statement. What’s more, crypto-assets can be utilized for fraud, cybercrime, money laundering and terrorism financing, according to the committee.
Should banks choose to open their doors to blockchain products and services, they should consider adopting related due diligence measures, reviewing their governance and risk management policies, disclosing their crypto-asset exposure and increasing their dialogue with banking supervisors, the group said.
The statement comes amid a public consultation period launched last month by the Financial Action Task Force, or FATF. The Paris-based intergovernmental group is seeking comments from the private sector on planned amendments that would more fully address virtual currencies within its recommendations on fighting money laundering and terrorist financing.
FATF is accepting written comments through 8 April and will consider final adoption of the amendments in June.
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