BIS report recommends "blocking" crypto risks, sparking industry anger: Is DeFi really that dangerous?

The Bank for International Settlements (BIS) recently published a new report on cryptocurrencies and decentralized finance (DeFi), advocating for a "containment" regulatory strategy to prevent systemic risks to the traditional financial system (TradFi). This immediately triggered a strong backlash from the crypto industry, with critics calling the report "dangerous and ignorant". The report, titled "Cryptocurrencies and DeFi: Functions and Impact on Financial Stability", points out that with trends like cryptocurrency ETFs and tokenization of real-world assets, the crypto industry's connection to traditional finance is deepening. While acknowledging the innovative potential, the report warns of potential risk spillover effects. The authors argue that the goal of prudent regulation is to prevent risks from crypto and DeFi from spreading to critical financial sectors and the real economy, thus making a "containment" strategy necessary. However, the report also admits that a complete ban on cryptocurrencies is "neither ideal nor feasible". The report highlights three major risks in the crypto industry: information asymmetry, anonymous operations, and ongoing fraud. It suggests strengthening regulation through more transparent information disclosure, mandatory KYC procedures, and establishing minimum professional qualification standards. The crypto industry responded fiercely. CoinFund's president Christopher Perkins criticized the report as "completely misunderstanding the situation and even dangerous". Curve's founder Michael Egorov simply stated: "Boycott this sh-t". The report emphasizes that despite blockchain's transparent structure, consumers still face information asymmetry challenges, and the anonymity of blockchain reduces participants' reputation risks.