EU Watchdog Believes Crypto’s Link to Traditional Finance Not Yet Systemically Risky

Findings of the European Systemic Risk Board

The European Systemic Risk Board (ESRB), in its most recent report on the “systemic implications” of cryptocurrencies, has stated that the crypto sector does not currently pose any systemic risks to the real economy. According to the ESRB, the existing links between the crypto sector and the traditional financial sector are not “significant” enough to warrant major concerns.

Preparedness for Future Risks

Even though the ESRB doesn’t currently view the link between cryptocurrencies and traditional finance as significant, it has indicated its intention to establish proposals on how to develop a European and global regulatory standard to safeguard against crypto assets that might pose systemic risks in the future.

Conclusion

While cryptocurrencies currently don’t pose a significant systemic risk to traditional finance according to the ESRB, the board recognizes the potential for future risks and is actively considering regulatory measures to address these potential challenges. As cryptocurrencies continue to develop and possibly integrate more with the traditional financial sector, the ESRB’s position could change, reflecting the evolving landscape of the crypto industry.

1. (https://coinmarketcap.com/headlines/news/eu-risk-watchdog-does-not-deem-crypto-link-to-tradfi-significant-to-pose-systemic-risk-yet/)  ²
2. (https://www.bitcoininsider.org/article/215659/eu-watchdog-does-not-deem-crypto-link-tradfi-significant-pose-systemic-risk-yet)  ²
3. (https://www.coindesk.com/policy/2022/06/30/eu-watchdog-wants-to-address-threat-crypto-assets-could-one-day-pose-to-financial-system/)  ²