Hyun Song Shin, an official with Bank for International Settlements’ (BIS), argued that cryptocurrencies should be treated as securities. Business Times reported June 25.
At the annual general meeting, Shin, BIS’s economic adviser and head of research said:
“If people pay to hold the tokens for financial gain, then arguably they should be treated as a security and come under the same rigorous documentation requirements and regulation as other securities offered to investors for a return.”
Speaking about Bitcoin, the leading cryptocurrency Shin noted that the Transaction fees keep on rising exponentially and corresponded with the crash in the price of bitcoin. He explained:
“This kind of upsurge in transaction costs brings to mind what happens in securities markets when market liquidity dries up during sharp price changes. In this sense, BTC is more like a cryptocurrency asset, or a cryptosecurity, than a currency.”
BIS research head opinion comes at a time when regulatory authorities around the globe are working on how to develop a robust cryptocurrency regulatory framework.
Shin’s sentiments were aired earlier this year in March by Mark Carney, Governor of the Bank of England (BoK). Carney urged the regulators to regulate cryptocurrencies rather than “ban them outright.” Carney suggested that cryptocurrency ecosystem should be assimilated into the rest of the “financial system.” Applying the same regulatory approach and the same “rigorous standards” to cryptocurrency ecosystem.
The U.S. Securities and Exchange Commission (SEC) Corporation Finance Director William Hinman, two weeks ago stated that Ether, the leading altcoin cannot be treated as security, but some initial coin offerings (ICOs) could be. Hinman’s argued that Ethereum is now sufficiently decentralized to disqualify it from a securities classification.
According to Jay Clayton, the head of the SEC, ICOs are classified as stock sales whereas Japanese financial regulators consider ICOs as forms of payment.
In an interview with CNBC on June 6, Clayton stressed that the agency wouldn’t amend securities laws to cater to cryptocurrencies. Citing research by Autonomous Next, he pointed out that ICOs have raised $9.1 billion this year alone.
“If you have an ICO or a stock, and you want to sell it in a private placement, follow the private placement rules,If you want to do any IPO with a token, come see us.”
The BIS based in Switzerland is the central bank for central banks. It’s owned by 60 central banks representing 95 percent of global GDP. The bank recently released two select chapters from their Annual Economic Report, one of which was focused on ‘looking beyond the hype’ of cryptocurrency. In the report, the BIS lists three main flaws that will keep cryptocurrencies from replacing cash: “stability of value, scalability, and trust in the finality of payments.”