As proponents of traditional finance remain adamant about dismissing Bitcoin (BTC) and the cryptocurrency ecosystem as financial risks, a survey conducted by the Federal Reserve Bank of New York – one of the 12 federal reserve banks of United States- revealed 11 factors that dwarf cryptocurrencies in terms of risk in 2022.
Geopolitical tensions, foreign divestments, COVID-19 and high energy prices were some of the most cited potential risks to the US economy, according to a survey of central banks released by the Federal Reserve System.
Of the 14 factors that pose financial risk, cryptocurrencies rank eleventh, revealing a shift in investor mindset due to ongoing efforts by entrepreneurs in the crypto space to educate the masses.
Some of the most pressing risk concerns raised by respondents related to the power struggle of global economies, including tensions between the United States and China, the war between Russia and Ukraine, rising energy prices, rising inflation, the COVID-19 pandemic, and cyber attacks, to name a few.
However, the US central bank maintains its anti-crypto position when it comes to assessing the risks in investing in digital assets. He noted in the report that selected cryptocurrencies — including BTC, Ether (ETH), BNB (BNB), Cardano (ADA), and XRP (XRP) — have lost around 69% of their value. compared to the November 2021 peak, adding that:
“Speculation and risk appetite seem to be the main drivers of crypto asset prices, which have seen huge swings in recent years.”
The central bank also cited the collapse of the Terra ecosystem, noting that entities that had direct exposure to the protocol’s TerraUSD (UST) stablecoin ran into financial difficulties, sometimes leading to bankruptcy.
The other side of the world, India launched its central bank digital currency (CBDC) for the wholesale segment.
Although the country is still opposed to the idea of mainstreaming cryptocurrencies, the pilot project saw the participation of nine traditional local banks, including the State Bank of India, the Bank of Baroda, the Union Bank of India, the HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC.
Related reports suggest that India’s central bank – the Reserve Bank of India (RBI) – plans to launch a retail digital rupee within a month in select localities.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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