Yesterday the Bank for International Settlements (BIS) published a Bulletin exploring why blockchain activity has fragmented across dozens of separate networks rather than converging on one or two. Buried in the policy section is its most consequential point. Some of the plumbing that connects these networks is becoming systemically important, and the BIS floats the idea of overseeing the operators much like financial market infrastructures (FMIs).
A comparison helps here. Swift is essentially a messaging system between banks. It was not heavily regulated in its early years, but as it became critical to global payments it came under formal central bank oversight. The BIS identifies blockchain components on a similar path. Interoperability protocols pass verified messages between blockchains, not unlike Swift passing messages between banks. Shared sequencers decide the order in which transactions are processed across multiple networks. Data availability layers publish transaction data so that anyone can verify what happened. As these services scale, the paper says they “may warrant governance arrangements, resilience standards and supervisory attention comparable to those applied to FMIs.”
The paper’s starting point is that every blockchain design involves choices. For example, requiring validators to run higher spec hardware means fewer of them can participate, which enables faster and cheaper transactions at the cost of decentralization. Bitcoin and Ethereum made the opposite choice, prioritizing broad participation and accepting congestion and higher fees as a result. Because there is no single best answer, dozens of networks coexist, each with its own users, assets and liquidity.
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