Crypto asset markets could pose 'threat to global financial stability'

Markets increasingly ‘interconnected’

Crypto asset markets could pose a threat to global financial stability, as a result of their potential scale, structural qualities and increasing interconnectedness with the traditional financial system, according to a recent report by the Financial Stability Board (FSB).

According to the financial watchdog, the rapid evolution of crypto markets, combined with their geographical potential, could mean regulatory gaps, fragmentation and arbitrage in markets start to emerge. Financial stability risks may start to escalate, highlighting the need for timely evaluation of potential policy response across nations, the body added. Unbacked crypto assets, which make up 95% of the crypto market, remain disconnected from important financial institutions and core markets but could over time expand, as could episodes of price volatility that have so far been contai...