BIS Calls for Tighter Crypto Regulation to Protect Traditional Finance, Drawing Criticism from Industry Leaders
The Bank for International Settlements (BIS) has released a new report urging policymakers to adopt a “containment” strategy for cryptocurrency and decentralized finance (DeFi) risks, citing growing links between digital assets and traditional finance. However, the recommendations have sparked strong reactions from key figures in the crypto community, who argue the proposals are misguided and potentially harmful.
The report, titled “Cryptocurrencies and decentralised finance: functions and financial stability implications,” highlights the increasing overlap between decentralized technologies and mainstream financial infrastructure. Notable developments—such as the rise of crypto exchange-traded funds (ETFs) and the tokenization of real-world assets—have, according to BIS, made it imperative to mitigate any potential spillover effects from crypto markets into the traditional financial (TradFi) system.
“In terms of prudential regulation, the objective is to make sure that the risks that may be generated by crypto and DeFi do not spill over to crucial parts of TradFi and the real economy,” the report explains. “Hence, a ‘contain’ approach is warranted.”
The authors stress that a full ban on crypto is neither practical nor desirable, but they advocate for enhanced oversight measures—including disclosure requirements, Know-Your-Customer (KYC) protocols, and professional standards for operators.
The report identifies “externalities” as a major source of concern—unintended costs or risks passed on to uninvolved third parties. It also critiques the pseudonymous nature of blockchain activity, which it argues can lower reputational consequences and incentivize high-risk behavior. Moreover, BIS points to persistent information asymmetries in DeFi, despite the transparent design of many blockchain protocols, citing the continued presence of scams and low-quality projects as evidence.
Still, not everyone is convinced.
Christopher Perkins, president of crypto investment firm CoinFund, was among the most vocal critics. In a post on X (formerly Twitter), Perkins called the BIS conclusions “completely uninformed and frankly, dangerous.”
“Many of their recommendations and conclusions—perhaps due to a mix of fear, arrogance or ignorance—are completely uninformed,” Perkins wrote. “If implemented, they will cause—not mitigate—the systemic risk they seek to prevent.”
Perkins also pushed back on claims of DeFi opacity, arguing that open-source, auditable code represents a meaningful improvement over traditional finance’s hidden mechanisms.
Others in the crypto space echoed his sentiment more bluntly. Michael Egorov, founder of DeFi protocol Curve, responded with a short and sharp rebuke: “Boycott this sh-t.”
Despite the backlash, the BIS maintains that regulation must evolve in step with technological adoption, particularly as decentralized platforms begin to mirror—and integrate with—established financial institutions. The call for action comes as global regulators struggle to balance innovation with systemic safety, especially as crypto markets continue to mature and attract institutional interest.