The FSB has published a report assessing the risks to financial stability from cryptoassets. The report examines the developments and associated vulnerabilities relating to cryptoasset markets which it considers could reach the point of threatening global financial stability. Such vulnerabilities include:
- increasing linkages between cryptoasset markets and the regulated financial system;
- liquidity mismatch;
- credit and operational risks making stablecoins susceptible to sudden and disruptive runs on their reserves;
- increased use of leverage in investment strategies;
- concentration risk of trading platforms; and
- the lack of regulatory oversight of the sector.
The report also notes that the the rapid evolution and international nature of the markets raises the potential for regulatory gaps, fragmentation or arbitrage. It calls for a timely and pre-emptive evaluation of possible policy responses to the financial stability risks. In the meantime, the FSB will continue to monitor developments and risks in the markets, including in relation to cryptoasset trading platforms.