Cryptocurrencies Should Be Classified As Securities, BIS Head Researcher Says

Jay Clayton, chairman of the U.S. Securities and Exchange Commission, said in an interview with CNBC earlier this month that many of the cryptocurrencies he observes today should be classified as securities. Now, the Bank for International Settlement (BIS) has a similar perspective, saying that cryptocurrencies should be categorized in the same way stocks and bonds are, Cointelegraph reported.

The sentiment came from Hyun Song Shin, economic adviser and head of research at BIS. He shared this view on Sunday in Basel, Switzerland, where the annual meeting of BIS took place.

"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."

Recently, BIS released a report saying cryptocurrency will be found to be an insufficient replacement for traditional money due to issues surrounding it, particularly the scalability problem. The report even went on to say that because of the massive ledger that the blockchain technology is going to produce, the whole chain can potentially “halt the internet.”

While BIS’s argument against cryptocurrencies has some valid points, others are sensing that the financial institution is threatened by this new alternative money. A CCN opinion piece stated that the report released by BIS doesn’t take into account the developing solutions that are being made in the crypto market, as well as the potential uses and advantages that it can bring to the global financial sector.

While the debate on this matter remains unresolved, regulators will ultimately be the one to decide whether cryptocurrency can be counted as a security. The SEC has already made it clear that Bitcoin and Ethereum are not securities but rather are virtual replacements for fiat currency.