Regulations and Risks in Using Permissionless Blockchains for Banks
Thursday, 29 August 2024, 04:02
Regulations Impacting Blockchain Technology for Banks
Recent regulations proposed by the Basel Committee and the Bank for International Settlements (BIS) signify a cautious approach to using permissionless blockchains for banking transactions.
Significant Risks Identified
- Operational and Security Risks: Banks face numerous operational risks when integrating blockchain technologies.
- Governance Challenges: The decentralized nature complicates governance of transactions.
- Legal Compliance: Ensuring adherence to regulations is paramount.
- Settlement Finality: The uncertainty around transaction finality poses challenges.
- Distributed Ledger Technology (DLT) may not resolve inherent risks.
Besides these, zero-knowledge proofs could offer some advantages but also present unique vulnerabilities for the banking sector.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.