The digital currency market is coming under increasing fire from the central bank’s bank. The latest view from the Bank for International Settlements could place a giant hurdle in the path of the emerging cryptocurrency market.

The BIS and the crypto currency afcionados are well on the way to becoming the best of enemies. The Basel-based BIS apparently never tires of warning about digital currencies. BIS chief economist Hyun Song Shin recently told finews.com that few very players made any money from digital currencies like bitcoin. And most recently his boss Agustìn Carstens advised the crypto currency sector to «stop printing money».

These comments have elicited an angry response, some of which has been vented on the social media channels (see below), as the sector portal «Coindesk» has noted. The fact that BIS controls central banks, who in the view of crypto fans do nothing but print (paper) money, has raised hackles in the digital sector. «This smacks of a monopolist, who is ordering a rival to shut down his business», one angry commentator wrote on Twitter.

In addition BIS isn’t content with simply undermining the growing crypto sector through studies, comments and speeches. It’s banking regulation committee is now apparently planning to make life more difficult for the sector.

Bitcoin & Co to Provide Equity

According to the «Financial Times» (behind paywall), the BIS is investigating just how deeply some of the banks under its control are involved in the crypto currency market. In the weighty report from its Financial Stability Board, BIS experts are looking to formalize the «appropriate dealings in crypto investments». In other words: As in other investment activities, Bitcoin & Co might have to comply with equity capital requirement like other banks.

In times when banks are struggling to meet with the Basel III capital requirements on building expensive capital bases, this could sour their appetite for crypto currency dealings. Without the banks and their client connections, corporate account controls and payment systems, the crypto-startups face a difficult challenge, as experience in Switzerland has already shown.

From Zug's Crypto Valley to Basel?

There are level-headed players in the crypto currency scene who would welcome improved regulation in the digital investment sector. And «crypto valley» in Zug is hard at work with the relevant authorities in trying to agree a regulatory framework for the sector, and is thus already working closely with Switzerland’s financial markets regulator Finma.

The question now is whether representatives from Zug will now also have to negotiate with Basel.