The chairman of the Financial Stability Committee warned about the systemic risks of encryption assets.

Gate News bot message, on June 12, Chairman Klaas Knot of the Financial Stability Board (FSB) delivered a keynote speech at a conference hosted by the Bank of Spain, warning about the growing systemic impact of encryption assets.

Knot expressed concerns about the growing intersection between digital assets and traditional finance, stating: “The FSB has long believed that cryptocurrencies do not yet pose systemic risks, but recent developments indicate that we may be approaching a tipping point.”

“The threshold for retail investors has significantly lowered, especially after the launch of cryptocurrency ETFs. The connection between cryptocurrency and the traditional financial system continues to strengthen. For example, stablecoin issuers now hold a large amount of U.S. Treasury bonds. We must keep a close eye on this area,” Knot added.

The FSB is an international organization responsible for monitoring the global financial system and making recommendations for its improvement. This organization has been closely watching the technological and market developments in the encryption currency sector and has become increasingly concerned about it.

Knot links it to broader vulnerabilities and warns that rapid innovation coupled with insufficient regulation may exacerbate the risk of contagion. The rise of cryptocurrency is partly due to inefficiencies in the cross-border payment space, although efforts like the G20 roadmap aim to bridge these gaps, implementation barriers still exist.

Knot emphasizes that as the integration of encryption currencies continues to advance, the scope of regulation must also be adjusted accordingly.

Source: Bitcoin.com