BIS, the central bank of central banks, released a paper exploring the financial stability risks of cryptocurrencies and decentralized finance (DeFi). While this is a topic that has been covered many times, including by some of the same authors a couple of years ago, the paper is articulate and fresh. This report states that the crypto market has “reached critical mass”, although it still considers it as having minimal linkages to traditional finance (TradFi). However, the issuance of Bitcoin ETFs and the expansion of stablecoins and real world asset (RWA) tokenization are changing that. It also included a noteworthy graphic showing that in crises, small investors increase their crypto exposures, while wealthier ones get out. Hence, they conclude that the crypto market can be “a means for redistributing wealth from the poorer to the wealthier.” When outlining how DeFi works, the authors note the difference between a DeFi protocol and an application, which usually has a user interface and has a “centralization vector”. In other words, dApps are potential regulatory touchpoints. The authors consider research into the financial stability implications of RWA tokenization as a top priority, including systemic risks of tighter linkages between DeFi and TradFi. They also see stablecoins as having a central role in DeFi and their potential instability is an area needing further analysis. Earlier in the paper, they noted that payment and settlement system instability or disruption can have the most widespread economic knock on effects. Finally, they want to explore how to address the cryptoisation risks for emerging market economies, a topic that the IMF has been highlighting for some time.