Among the areas of concern are the use of leverage, technological fragilities and liquidity shortages, according to a report published on Wednesday by the Financial Stability Board (FSB). The report also highlights concerns such as poor investor and consumer awareness of crypto assets, as well as the risks of money laundering, cybercrime, and ransomware.
The rapid evolution and international nature of these assets means that authorities must consider “a timely and preemptive assessment of potential policy responses,” according to the report. This includes prioritizing cross-border and cross-sector cooperation, including faster information sharing to keep pace with the evolution of crypto assets.
The warning is an evolution of the previous FSB report published in 2018, which concluded at the time that crypto assets do not “pose a material risk to global financial stability.” The FSB said then that regulators would continue to monitor the asset class on an ongoing basis given “the speed of developments and the existence of data gaps”.
The FSB is made up of representatives from authorities such as the European Central Bank, the Bank of England and the Federal Reserve.