Bank for International Settlements: During times of market crisis, cryptocurrencies have become a means of transferring wealth from the poor to the rich

ChainCatcher news, according to Ledger Insights, the Bank for International Settlements (BIS) has released a paper exploring the financial stability risks of cryptocurrencies and decentralized finance (DeFi). It points out that although it is currently widely believed that the connection between cryptocurrencies and traditional finance (TradFi) is minimal, the issuance of Bitcoin ETFs, the expansion of stablecoins, and the ongoing development of tokenized real-world assets (RWA) have brought the cryptocurrency market size to a critical point that could trigger financial stability risks.

Furthermore, the BIS report also notes that during market crises, small investors typically increase their exposure to cryptocurrencies, while "wealthy" investors tend to withdraw. Thus, the conclusion is drawn that the cryptocurrency market has become a means of transferring wealth from the poor to the rich.

The BIS report suggests that DeFi should implement regulatory requirements similar to those in TradFi, including "know your customer" compliance constraints, information disclosure, and adequate training and qualification for market professionals.