In a letter to the Basel Committee on Banking Supervision today, the American Bankers Association said that the global financial system will benefit from the transparency of supervised financial institutions’ involvement in the cryptoasset market, rather than risking driving the market outside the banking system.
“Rational supervision and regulation that avoids overly prescriptive approaches will promote key public objectives of law enforcement, and suppression of terrorism finance and other security threats,” ABA wrote. The association said that more work is required to inform the policy debate around banks’ cryptoasset exposures and urged the committee to consider several key principles.
ABA urged the committee to acknowledge the need for a common understanding of cryptoassets and the risks they present, adding that authorities should take care to avoid preempting technological innovation by being overly prescriptive. “Technological evolution is rapid, and highly prescriptive regulation cannot be adjusted quickly enough to remain current,” the association wrote. “Inflexibility would constrict financial inclusion and other benefits of emerging technology.”