Crypto nears systemic risk 'tipping point'
Cryptocurrency could be nearing a point where it poses a system risk to the world's financial system, the outgoing chair of the Financial Stability Board has warned.
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In a speech in Spain, Klaas Knot noted that - despite bankruptcies, liquidity crises and fraud in the sector - the FSB has long maintained that crypto does not yet pose a system risk.
However, he warns that recent developments such as the erosion of barriers to retail take-up and growing interlinkages with the traditional financial system "suggest we may be approaching a tipping point".
Klaus notes that stablecoin issuers now hold substantial amounts of US Treasuries, adding "this is a segment we must monitor closely".
The FSB chair says that the cross-border nature of crypto means that his organisation's recommendations offer a common foundation that is important for regulators around the world developing their frameworks.
Nick Jones, CEO of digital assets platform Zumo responded to Klaas's speech: 'If the FSB looks through a different lens, stablecoins and other cryptoassets have significant potential to fortify financial resilience by introducing cost savings, faster transaction processing, and advanced security features underpinned by cryptographic principles."
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