The outgoing chairman of the Financial Stability Board (FSB), Klaas Knot, has warned to interconnects between the digital asset sector and Traditional economy (Tradfi) is approaching a “tip point” and creates potential risks.
FSB Plenum, FSB’s decision-making-a international organization that monitors and provides recommendations on the global financial system-met in Madrid June 11 to discuss important priorities for global Economic stability.
Speak at the event, knot said that ‘Technological innovation Transforms the financial sector. It adds new layers of complexity. And that does it with speed. “
Knot, whose service as FSB chairman will end on June 30, warned that some of this increased complexity is down to the systemic risk that the growing digital asset sector constitutes Tradfi.
“At FSB, we have long argued that crypto does not yet constitute a systemic risk, but the latest developments indicate that we may be approaching a tip point,” said KnotIn accordance with one de Nederlandsche Bank copy of his speech. “Barriers for retail users have dropped considerably, especially with the introduction of Crypto ETFs. Collaboration with the traditional financial system continues to grow.”
He marked in particular Stablecoins As a potential area that is worrying and notes that “Stablecoin issuers, for example, now have significant amounts of us state cash registers. This is a segment that we must monitor carefully.”
Systemic Stablecoin problems
Many legislators and supervisory authorities around the world have also identified risk That some Stablecoins poses.
European Union landmark Markets in Crypto -Assets (Mica) regulation– The StableCoin regulations came into force in June last year – made strict requirements for Stablecoin issuers, including that they must maintain complete reserves, undergo regular audits and secure approval from a national authority.
According to Mica, some Stablecoins May Also Be Considered ‘Significant’ or ‘Systemic’ If they meet any of Seven Criteria, Including Having More Than € 5 Billion ($ 6.28 Billion) in Resists, Over 10 Million Users Over IT Processes, iF IT Processes, iF IT Processes, iF IT Process Over ^ iF IT Process Over € 5 million) Daily IF it’s used for payments on a global scale, or based on its level of interconnected with the financial system.
For Stablecoins that fall into this category, Mica requires additional action, as has been compared to the regime applied to classify global systemically important banks and European Banking Authority (EBA) will have supervisory responsibility for issuers of these Stablecoins.
At the same time, in the UK, where digital assets remain largely unregulated, is the Financial Conduct Authority (FCA) Progress Stablecoin regulation In addition to Bank of England (Boe), whose later is expected to have monitoring of Stablecoins as “working on a systemic scale.”
In its speech to the FSB planer, knot repeated the need for such regulation and said: “The crypto ecosystem will continue to develop – and so does our regulations.”
The industry’s response
The comments from the outgoing FSB chair received a quick response from certain industry figures.
Nick Jonesco -founder and CEO of Zumo, a Decentralized mobile wallet And the payment platform built on blockchain technology, gave knots a short script.
“Given the widespread turmoil in the traditional financial system in recent years, the industry should consider alternative financial solutions and not panic when they get traction,” Jones told Cooingeek. “It is clear that many people feel locked up from the sitting system and are looking for viable alternatives. A resilient future financial system should certainly try to integrate new ideas and structures that provide value for consumers.”
He added that Zumo saw “increased institutional and retail interest in digital assets, a wave of crypto listings and a variety of offers that draw Tradfi and define closer together.”
Instead of closing the doors to flourish digital assets, such as StableCoins, Jones suggested that FSB “look through another lens” and realize that StableCoins and other digital assets “have significant potential to strengthen economic resilience by introducing cost savings, faster transaction processes and advanced security function under
Jones said that the focus should be on “getting the growing regulatory regimes right for our emerging sector, which ensures that consumers are fully protected while giving innovation the necessary space to breathe.”
For its part, the FSB chairman also emphasized some of the benefits provided by innovative techniques, namely that “technology has made financial services faster, more accessible, more efficient. And in some areas, such as AI, we have only begun to see its full impact.”
Knot’s speech in Madrid was accompanied by FSB plenum that confirmed Andrew Bailey, governor of Boe, as the next FSB chairman for a three-year period which began on July 1 this year.
Watch: Richard Baker on Engineering a smarter financial world with blockchain
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