The Financial Stability Board (FSB) has raised new concerns about the increasing entanglement between the cryptocurrency sector and traditional finance, warning that the global financial system may be approaching a critical threshold.
FSB's Warning on Linked Risks
Speaking in Madrid on June 12, outgoing FSB Chair Klaas Knot indicated that while crypto assets currently do not pose a systemic risk, the situation is rapidly changing. "We may be approaching a tipping point here," he stated, emphasizing that growing linkages—particularly through stablecoins and crypto investment products—require urgent attention.
Rising Popularity of Stablecoins and Their Influence
Knot noted that one key driver is the decline in barriers to retail investing. The introduction of crypto exchange-traded funds (ETFs) has opened new channels for individual access to digital assets, thereby augmenting exposure across mainstream portfolios. Overall, stablecoin assets now exceed $251 billion in circulation.
U.S. Legislative Initiatives on Stablecoins
Meanwhile, in Washington, lawmakers are advancing efforts to provide regulatory clarity in the stablecoin space. On June 11, the U.S. Senate voted 68-30 to move forward with the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
The FSB continues to monitor developments in the cryptocurrency sector and their implications for traditional financial systems, highlighting the need for careful oversight and regulation.
