The Bank for International Settlements (BIS) indicated that the rise of cryptocurrencies and related technology poses several regulatory challenges. It said that cryptocurrencies are a form of digital money that enables digital peer-to-peer exchange. It noted that despite being created privately, such currencies cannot be redeemed. It added that cryptocurrencies rely on a computer code, known as the Protocol, that specifies how users can transact, as well as on a ledger that stores the history of transactions and on a decentralized network of participants that operate under the Protocol. First, it said that anti-money laundering and combating the financing of terrorism measures could be evaded through the usage of cryptocurrencies. It noted that such currencies could be used to avoid capital controls or taxes, or to engage in illegal transactions. Second, it pointed out that protecting consumers and investors who deal with cryptocurrencies is challenging, especially in terms of digital security. It cited digital theft as a common problem that results from using these currencies, as most users access their cryptocurrency holdings through third parties that have proved to be fraudulent or that have suffered from hacking attacks. It added that fraud is common in initial coin offerings that auction an initial set of cryptocurrency coins to the public. Third, it said that the widespread usage of cryptocurrencies could pose a challenge to the stability of the financial system over the long term. As such, the BIS called for regulating cryptocurrencies through a global coordinated initiative that is adapted to the global nature of these currencies, among other measures. 
Source: Bank for International Settlements