The Bank for International Settlements (BIS) has issued a report exploring the financial stability risks associated with cryptocurrencies and decentralized finance (DeFi). While often viewed as separate from traditional finance, the report emphasizes that the growth of Bitcoin ETFs, stablecoins, and tokenized real-world assets (RWA) is driving the cryptocurrency market’s size to a point where it could pose threats to financial stability. 💰 The report further reveals that during market downturns, smaller investors tend to increase their crypto holdings, while wealthier investors pull back, potentially fueling a transfer of wealth from less affluent to more well-to-do individuals. 🤔 To mitigate these risks, the BIS suggests DeFi should adopt regulatory measures similar to those implemented in traditional finance (TradFi), including ‘know your customer’ requirements, transparent disclosure practices, and rigorous training and certification for market professionals. 💼