The Bank for International Settlements (BIS) has called for a radical shift in how global regulators oversee cryptoasset service providers (CASPs), urging the application of bank-like prudential tools to reduce growing financial stability risks.
In a comprehensive report released on April 23, 2026, the BIS warned that the evolution of multifunction crypto intermediaries (MCIs) into complex financial hubs needs urgent, activity-based oversight.
The rapid evolution of cryptoasset service providers into financial intermediaries highlights the need for robust prudential frameworks. Explore the risks and policy challenges https://t.co/YteSL21n4b pic.twitter.com/K1s76YvR8g
— Bank for International Settlements (@BIS_org) April 23, 2026
The FSI Occasional Paper No. 27 highlights how entities like the failed FTX and Celsius evolved beyond simple trading platforms to offer lending, yield products, and derivatives. This “intermediation” creates precarious credit and liquidity mismatches, often worsened by the reuse of customer assets in high-risk “earn” programmes. The BIS argues that existing gaps in oversight leave the broader financial system vulnerable to spillovers, particularly during periods of extreme volatility.
Bridging the regulatory gap
To address these vulnerabilities, the BIS advocates for a hybrid regulatory framework. This approach combines entity-based rules with activity-based requirements, specifically targeting capital and liquidity buffers. By forcing MCIs to maintain robust governance standards and undergo regular stress testing, regulators aim to contain the fallout from potential failures and prevent a repeat of the 2025 flash crash.
Moreover, it emphasises that crypto volatility and the opaque interconnections between platforms amplify market shocks. Unlike traditional finance, the crypto sector lacks a “lender of last resort,” making it essential for intermediaries to be self-sufficient and resilient.
BIS Warns Cryptoassets Threaten Global Stability
The Bank for International Settlements (BIS) flags the rapid growth of cryptoassets like stablecoins as a threat to worldwide financial systems. General Manager Pablo Hernández de Cos raised this during a Bank of Japan seminar in Tokyo, urging global regulation and supervision of cryptoasset service providers (CASPs).
These cryptoassets, including giants like USDT and USDC, behave like investments rather than stable money. Backed by bonds, they trade off-peg with fees, sparking volatility in crises and challenging monetary policy transmission.
Meanwhile, Bank of England Governor Andrew Bailey has warned that international efforts to create unified stablecoin regulations have “ground to a halt,” raising risks of regulatory arbitrage. Bailey, chairing the Financial Stability Board (FSB), stressed that inconsistent global standards could enable firms to exploit weak rules, threatening financial stability as the market exceeds a billion.
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