FILE PHOTO: Virtual currency Bitcoin tokens are seen in this illustration picture, December 8, 2017. REUTERS/Dado Ruvic/Illustration/File Photo
LONDON (Reuters) – The growth in crypto-assets such as Bitcoin pose a threat to banks and global financial stability, despite relatively low levels of exposure among key players, the Basel Committee has warned.
Crypto-assets are not a reliable substitute for money and are unsafe to rely on as a medium of exchange or store of value, the global banking watchdog said in a statement on Wednesday.
The Basel Committee said that while banks currently have “very limited” direct exposure to crypto-assets, they should still improve their risk management and disclosure processes to minimize risk.
Crypto-assets are also highly volatile and expose banks to risks including fraud and terrorist financing links, it said.
The body said it is coordinating with other global standard setting boards and the Financial Stability Board on improving prudential treatment of exposures to cypto-assets.
Reporting by Iain Withers, editing by Sinead Cruise