Crypto-Assets in Banks

Abstract

Crypto-assets, such as cryptocurrencies and tokens, offer a diverse range of payment and investment services. Particularly, tokenisation simplifies products and processes, making negotiation and exchange easier and reducing inefficiencies and costs. However, this disintermediation does not necessarily reduce the role of banks, but rather transforms it, as the increasing complexity of products and services increases the importance of high-value consulting services. Banks can benefit from entering the distributed ledger technology (DLT) ecosystem and can serve as a reliable reference point for investors, consumers, and issuers. However, banks are also exposed to compliance and reputational risks that can only be managed with clear regulation. Regulatory uncertainty, stemming mainly from confusion regarding the legal classification of crypto-assets, hinders the provision of services by banks, and increases risks for consumers and investors. The regulatory framework should be revised in a technology-neutral manner to address these issues and allow for experimentation of innovative solutions, such as the European MiCAR.