The @BIS_org just published a new paper, “Cryptocurrencies and decentralised finance: functions and financial stability implication.” The good news is that the authors finally realize that advancements in crypto (including the growth of ETFs, stablecoins and tokenized real world assets) can no longer be ignored. However, many of their recommendations and conclusions--perhaps due to a mix of fear, arrogance or ignorance--are completely uniformed and frankly, dangerous. If implemented they will cause--not mitigate--the systemic risk they seek to prevent. One of the most concerning recommendations is a neo-Kennanesque “containment” approach. Guys, crypto is not communism. It’s the new internet that provides anyone with a connection access to financial services. You cannot control it anymore than you control the internet. By trying to force separation and containment, you will 1) prop up a tradfi system with aging and failing technology and latent settlements, 2) and you expose the legacy system to liquidity risk of unimaginable scale when you have one system that settles in real time, 24/7 and other that stays closed after hours, weekends and holidays. I was on the trading floor of Lehman when it went bankrupt. Liquidity is everything during a time of stress. Trust me when I say, if you enable and encourage this settlement basis through containment--it will lead to the next systemic crisis. And tradfi will take the brunt of it. No, the solution is not to contain, the solution is to update the traditional system. Capital rules should not “contain” public blockchains--they should encourage them! Sadly, this is not the only concerning conclusion in this paper.👇 bis.org/publ/bppdf/bispap156…