Source: Cointelegraph Original: "{title}"

Christopher Perkins, president of blockchain investment firm CoinFund, warned that the BIS is attempting to isolate the crypto market, and its controversial recommendations regarding decentralized finance (DeFi) and stablecoins pose a "danger" to the entire financial system.

In a post on X on April 19, Perkins stated, "Many of their recommendations and conclusions—perhaps stemming from a mix of fear, arrogance, or ignorance—are completely thoughtless and frankly very dangerous." He was referring to a report released by the BIS on April 15 titled "Cryptocurrencies and Decentralized Finance: Functions and Implications for Financial Stability."

BIS's recommendations could expose traditional finance to risks of "unimaginable scale."

Perkins countered the BIS's proposed "containment" strategy—attempting to isolate the crypto market from traditional finance and the broader economic system—stating, "Cryptocurrency is not communism."

"It is a new internet that allows anyone with access to have the opportunity for financial services," Perkins said. "You cannot control it, just like you cannot control the internet."

Perkins warned that adopting a containment strategy towards cryptocurrencies would expose the traditional financial system to liquidity risks of "unimaginable scale," especially given that the crypto market operates in real-time around the clock, while traditional financial markets close after trading hours.

"If these recommendations are implemented, they will create—rather than mitigate—the systemic risks they are trying to guard against."

The BIS report warned that the number of investors and capital scale in cryptocurrencies and DeFi has "reached a critical mass," and investor protection issues have become a "highly concerning" matter for regulators.

Perkins refuted the BIS's claims about significant challenges in DeFi, arguing that DeFi actually represents a "significant improvement" in terms of "transparency" and imbalances within the traditional financial system.

Regarding the BIS's concerns about the anonymity of DeFi developers, Perkins questioned the relevance of this issue: "Sorry, but when was the last time a traditional financial company published its list of developers? Sure, public companies provide some level of disclosure and transparency, but they seem to be gradually disappearing, replaced by private markets."

Perkins also criticized the BIS's concerns about stablecoins, particularly regarding their potential to lead to "macroeconomic instability" in countries like Venezuela and Zimbabwe.

"If there is a demand for dollar-pegged stablecoins, and it helps improve the living conditions of people in developing countries, maybe that’s a good thing," Perkins said.

Perkins is not the only one criticizing this controversial report. Christian Catalini, co-founder of Lightspark, also posted a series of critiques on X the same day. He summarized the report with an analogy: "Imagine this: creating parking regulations for a fleet of self-driving drones—it's a serious job, but the technology is already two steps behind."

Related: Bitcoin rises 33% since the 2024 halving due to institutional disruption cycles.

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