Crypto nears systemic risk ‘tipping point’ – FSB chair

In a speech in Spain, Klaas Knot noted that – despite bankruptcies, liquidity crises and fraud in the sector – the FSB has long maintained that crypto does not yet pose a system risk.

However, he warns that recent developments such as the erosion of barriers to retail take-up and growing interlinkages with the traditional financial system “suggest we may be approaching a tipping point”.

Klaus notes that stablecoin issuers now hold substantial amounts of US Treasuries, adding “this is a segment we must monitor closely”.

The FSB chair says that the cross-border nature of crypto means that his organisation’s recommendations offer a common foundation that is important for regulators around the world developing their frameworks.

Nick Jones, CEO of digital assets platform Zumo responded to Klaas’s speech: “If the FSB looks through a different lens, stablecoins and other cryptoassets have significant potential to fortify financial resilience by introducing cost savings, faster transaction processing, and advanced security features underpinned by cryptographic principles.”