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FSB on Systemic Risks: Cryptocurrencies and Traditional Finance

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by Giorgi Kostiuk

20 days ago


The Financial Stability Board (FSB) has drawn attention to the growing systemic risks associated with the integration of cryptocurrencies into the traditional financial system, spurred by increased usage of stablecoins and growth of crypto ETFs.

Cryptocurrencies and Systemic Risks

The Financial Stability Board, led by Klaas Knot, noted that recent developments are pushing cryptocurrencies closer to systemic risks. Knot pointed to the reduction of barriers for users and increasing connections with the traditional financial system.

Impact of Stablecoins on Traditional Finance

Particular attention is drawn to stablecoins like USDT and USDC, which hold substantial U.S. Treasury reserves, influencing traditional financial markets. Knot emphasized: > "At the FSB, we have long maintained that crypto does not yet pose a systemic risk, but recent developments suggest we may be approaching a tipping point... Stablecoin issuers now hold substantial amounts of U.S. Treasuries. This is a segment we must monitor closely."

Regulatory Measures and Legislation

There is a growing acknowledgment of the potential financial impact these assets may have on traditional finance. Regulators are increasingly vocal about the need for oversight. There is mobilization in the U.S. Senate around legislation like the GENIUS Act aimed at regulating this rapidly evolving sector. These measures may lead to stricter surveillance of crypto activities.

Given the rising integration risks between cryptocurrencies and traditional finance, regulators may begin to implement stricter measures and international regulatory frameworks in response to potential threats.

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