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An association of global central banks expressed doubt to the finance ministers of the world’s 20 biggest economies about cryptocurrency’s suitability as a financial instrument due to “intrinsic structural defects.”

The Bank for International Settlements (BIS) wrote a report for an upcoming meeting of G20 finance ministers and central bank governors in Gandhinagar, India. The challenges plaguing crypto, they said, outweigh the potential innovations.

Despite the hype from retail and institutional players, “Cryptocurrency has yet to leverage innovation for the betterment of society,” they said.

Among the criticisms:

BIS cites losses from the FTX (CRYPTO: FTT) fiasco, plus the Terra (CRYPTO: LUNA) collapse. There are also too many risks associated with hacks and “rugpulls,” as well as scaling issues for blockchains to reach the size necessary for a full-fledged payment system.

According to the report, “overgrown, permissionless blockchains experience congestion.”

The G20 members seem to exhibit wariness towards endorsing stablecoins — cryptocurrencies tethered to the value of fiat currencies — especially given the pronounced effect they could have on centralized monetary policy in emerging markets.

Produced in association with Benzinga

Edited by Saba Fatima and Asad Ali