According to a new report by insurance giant Allianz, investment in cryptocurrencies could have a “profound” impact on financial institutions’ risk profiles.
In the report, Allianz Global Corporate and Specialty (AGCS) head of global finance, Ed Williams, said that firms offering cryptocurrency services in the form of trade or custody “face the prospect of potential third party liabilities.”
As a result of the merger of digital currencies and traditional finance, institutions will face cryptocurrency uncertainties, “questions about potential asset bubbles and regulation, as well as concerns about potential money laundering and the risks of theft or loss of access,” Williams said.
More and more cryptocurrency lenders are popping up, but who takes out loans using cryptocurrency as collateral? Yulong Liu of Babel Finance notes that both cryptocurrency miners and professional trading platforms can be borrowers.
Allianz makes comparisons with artificial intelligence (AI), robotics and biometrics that pose a threat to financial firms that use them, for example, for credit assessments. AGCS CEO Marek Stanislawski said:
“With each new technology, we are shifting focus and potentially increasing attack opportunities for cybercriminals. For example, crypto assets have many potential benefits, but they can also contribute to the growth of cybercrime, ransomware and the spread of ransomware viruses. ”
It was reported this week that asset managers began to doubt Bitcoin would become a reliable asset class. They fear that regulators will tighten their stance on cryptocurrencies.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
