FSB warns of increasing risks from cryptocurrencies because stable coins expand their influence on the financial sector
The Council of Finance is increasingly concerned about the growing importance of cryptocurrencies in the global financial world and warns that the boundaries between digital assets and traditional markets are blurring faster than expected.
In one Network In Madrid, Klaas Knot warned, who will soon resign as chairman of the FSB that cryptocurrencies are not yet at risk to the financial system overall, but could soon change. Thanks to the easier access for private investors via ETFs and the increasing commitment of institutional investors, the sector could reach a critical threshold.
An important focus of concern is the market for stable coins. Meanwhile, issuers now maintain enormous reserves of US state bonds, which makes the connection between digital assets and the mainstream financial system closer. Knot emphasized that this developing connection requires precise regulatory monitoring.
Recent studies confirm these fears. Investigations by the bank for international payment compensation show that stablecoin flows already have an impact on the short-term returns of government bonds. Rails can push the returns down by up to 2.5 basis points, while drainage can drive up to 8 basis points – which underlines the growing influence of the sector on the market. According to the data, Tether and USDC are the most influential actors.
Knot, who will step down at the end of June, leaves an ecosystem in transition. Andrew Bailey, Governor of the Bank of England, will take over the management of the FSB, while the US Congress is driving the Genius Act-a draft law that would create national rules for stable coin issuers. If he is adopted, this could help to consolidate the USA as a leading nation in the area of regulated digital financial services.
