Crypto assets currently do not pose threat to financial stability, says FSB

The Financial Stability Board (FSB), an international body monitoring the global financial system, has published a new report that highlights the analysis behind its proactive assessment of the potential implications of crypto-assets for financial stability.

The report, “Crypto-asset markets: Potential channels for future financial stability implications,” follows the summary of the work of the FSB and standard-setting bodies on crypto-assets published in July.

The latest report includes an assessment of the primary risks associated with crypto-assets and their markets, such as low liquidity, the use of leverage, market risks from volatility, and operational risks. On the basis of these features, the FSB said that “crypto-assets lack the key attributes of sovereign currencies and do not serve as a common means of payment, a stable store of value, or a mainstream unit of account.”

“Based on the available information, crypto-assets do not pose a material risk to global financial stability at this time. However, vigilant monitoring is needed in light of the speed of market developments,” it added.

The FSB said that crypto-assets could have implications for financial stability in the future if their use continues to evolve.

Crypto-assets also raise a number of policy issues, the FSB said, such as the need for consumer and investor protection, AML/CFT regulations, regulatory measures to prevent tax evasion, and more.