The Financial Stability Board (FSB), a global financial authority funded by the Bank for International Settlements, has released a new report on the financial stability risks associated with cryptocurrencies.
Published on Wednesday, the 30-page study details a number of financial risks related to various types of cryptocurrencies as well as the industry sectors, including private digital assets like Bitcoin (BTC), stablecoins like Tether (USDT) and decentralized finance (DeFi).
The report refers to some common-cited risks like a potential failure of certain stablecoins, which poses a significant threat to the stability of the entire crypto ecosystem due to the dominant trading volumes of stablecoins. The FSB also signaled risks related to the rapid DeFi adoption and the associated absence of clearly identifiable intermediaries, potential increasing bank sector involvement and others.
The FSB also pointed to risks arising from data gaps in the crypto industry, alerting the “lack of transparent, consistent and trusted data on crypto-asset markets and their linkages with the core financial system.”
“These data gaps make it difficult to assess the full scope of crypto assets' use in the financial system,” the FSB wrote, adding that such gaps significantly impede the ability to identify and quantify risks arising from the crypto industry.
“Data available on public blockchains is pseudonymous by design” as it is “difficult to determine the identity of the users engaging in crypto-asset activity,” the authority wrote.
The FSB listed a wide number of data gaps, including the share of households invested in crypto assets, volumes of crypto fraud, bank sector exposure, owners, the number and value of transactions in the payments
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