MNI BRIEF: Crypto A Threat To Global Markets, FSB Study Warns

Crypto-asset markets pose a threat to global financial stability, a Financial Stability Board report warned Wednesday, citing such key vulnerabilities increasing linkages between crypto-asset markets and the regulated financial system; liquidity mismatch, credit and operational risks that make stablecoins susceptible to sudden and disruptive runs on their reserves, and potential spillovers into short term funding markets.

Increased use of leverage in investment strategies is also a concern, the authors write, in addition to the concentration risk of trading platforms, lack of clear regulatory oversight, and low levels of investor and consumer understanding of crypto-assets, money laundering, cyber-crime and ransomware.