<ul><li>The Bank for International Settlements (BIS) has warned that cryptocurrencies and decentralized finance (DeFi) have reached a critical mass, posing a threat to financial stability.</li><li>The integration of crypto with traditional finance is growing, driven by the introduction of spot Bitcoin ETFs and the tokenization of real-world assets.</li><li>The BIS report highlights four transmission channels that could amplify future financial risks: direct exposure of traditional finance to crypto, market confidence shocks, wealth volatility due to price swings, and the use of crypto for payments and settlements.</li><li>The report suggests containing and regulating DeFi rather than prohibiting it, advocating for compliance measures like KYC requirements, transparency obligations, and licensing to mitigate potential spillover risks to the broader economy.</li></ul>

BIS Report: Crypto Now Big Enough to Threaten Financial Stability

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