As a naughty young child bitcoin was viewed as too vacuous and devoid of prospects to warrant serious attention. At the grand old age of 22, the cryptocurrency is poised to be given a seat at the high table by the Bank for International Settlements (BIS). BIS, the central bankers’ club, has issued recommendations for the “Prudential Treatment of Cryptoasset Exposures”. In other words: “How do we stop banks from exploding if they handle bitcoin?” “Cryptoassets have given rise to a range of concerns including consumer protection, money laundering and terrorist financing, and their carbon footprint,” the BIS report states. “Certain cryptoassets have exhibited a high degree of volatility and could present risks for banks as exposures increase”. If they are that bad, then why is BIS recommending “prudential” ways for banks to deal with them? There are two answers to this. Like it or not, an increasing number of banks and other financial institutions (such as the Swiss stock...
