TechFlow news — The Basel Committee on Banking Supervision (BCBS) stated in its latest report that banks face multiple risks when transacting on permissionless blockchains, including challenges related to money laundering, terrorist financing, operational and security issues, governance, legal uncertainties, settlement finality, and compliance. The BCBS, part of the Bank for International Settlements (BIS), is the primary global standard-setting body for prudential banking regulation.
The report emphasizes that some risks stem from blockchain's reliance on unknown third parties, making it difficult for banks to conduct due diligence and oversight. Addressing these risks requires new risk management strategies and safeguards, yet current risk mitigation practices are still at varying stages of development and have not been stress-tested.
Furthermore, banks face political uncertainty. New legislation could alter validator behavior, potentially destabilizing blockchains operationally. For example, bans might reduce the computational power available to secure a blockchain or decrease the amount of staked native tokens, temporarily increasing the risk of 51% attacks.
The report also notes that certain technologies are being developed to address some of these risks, particularly privacy concerns, with zero-knowledge proofs seen as a potential solution. Notably, last month the BCBS approved a disclosure framework on banks’ exposures to cryptoassets, which must be implemented by early 2026.
