The contagion effect of crypto-assets urges global regulators to intervene urgently to contain risk
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The Contagion Effect Of Crypto assets Urges Global Regulators To Intervene Urgently To Contain Risk

Stricter financial regulation and supervision and the development of international standards can help resolve many of the questions raised by crypto assets.

The already volatile universe of cryptoassets has been disrupted again by the collapse of one of its main platforms, highlighting the risks posed by cryptoassets without basic protections.

These losses punctuate an already complicated period for crypto assets, whose market value has lost trillions of dollars. The main one, bitcoin, has lost almost two-thirds of the maximum value reached at the end of 2021 and has caused almost three-quarters of investors to lose money, according to a new analysis published by the Bank for International Settlements in November.

In times of stress, we have seen market crashes in stablecoins, crypto-focused hedge funds, and crypto-asset exchanges, which in turn have raised serious questions about the integrity of these funds. Markets and user protection. Furthermore, as links with the central financial system become larger and deeper, concerns around systemic risk and financial stability could also arise soon.

Many of these problems can be resolved by stricter financial regulation and supervision and by developing international standards that national regulatory authorities can systematically apply.

In this context of serious disruptions and disruptions in many segments of the cryptoasset market, and repeated cycles of boom and bust in the ecosystem of this class of digital assets, the publication of two IMF reports on the regulation of the ecosystem of cryptoassets is especially timely. cryptoassets.

These reports address the issues mentioned above from two different levels. To start, we take a broad approach, with an analysis of the main entities responsible for carrying out the most important functions of the sector; hence our conclusions and recommendations apply to the entire cryptoasset ecosystem.

Second, we focus more specifically on stable coins and related agreements. These are crypto assets that seek to maintain a stable value concerning a specified asset, or a set of assets.

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