The Financial Stability Board, which makes recommendations to the G20 nations on financial rules, has warned that cryptocurrencies could see global financial instability “escalate rapidly”.
It has warned that policy makers must act fast on regulating the digital asset market.
“There is clearly a higher degree of urgency,” said Klaas Knot, the Dutch central bank governor who became chair of the Basel-based FSB in December.
He added that the board had previously been “comfortable” that there was no material risk from crypto because of its size and lack of connectivity to traditional financial markets, but that is changing rapidly. “Now what we are seeing is not only has there been a rapid increase in scale, but also, the touch points with traditional financial intermediation have increased and therefore it needs more focus from the FSB.”
