The crypto sector is approaching a "turning point" as ties with TradFi tighten, according to the FSB
Outgoing FSB Chairman Klaas Knot says stablecoins and ETFs are accelerating the integration of cryptocurrencies into traditional finance, raising concerns about systemic risks.
The Financial Stability Board (FSB) is sounding the alarm about the growing risks in the cryptocurrency sector, warning that interconnections with traditional finance are nearing a critical threshold.
In statements made on Thursday in Madrid, outgoing FSB Chairman Klaas Knot stated that, although cryptocurrencies do not yet pose a systemic risk to traditional finance, that situation may not last much longer. "We may be approaching a turning point," he said.
Knot noted that the barriers to entry for retail investors have "significantly decreased," especially with the introduction of cryptocurrency exchange-traded funds (ETFs). Cryptocurrency ETFs allow investors to gain exposure to digital assets without having to manage private keys, use e-wallets, or navigate exchange platforms.
Knot added that another area of concern is the stablecoin market. He pointed out that issuers now hold large amounts of U.S. Treasury bonds, which increases the ties between cryptocurrencies and traditional finance. "It’s a segment we clearly need to watch closely"