The Financial Stability Board (FSB), a worldwide financial institution funded by the Bank for International Settlements, has released new research on the financial stability risks associated with cryptocurrencies. The FSB report states that altcoin market data reporting needs worldwide norms to facilitate effective risk assessment.
Which altcoin projects are considered financially risky?
The 30-page report, released Wednesday, covers a variety of cryptocurrencies, including private cryptocurrencies such as Bitcoin (BTC), stablecoins such as Tether (USDT), and decentralized finance (DeFi) projects such as Avalanche (AVAX), and various financial assets associated with business sectors. encompasses hazards. Some important altcoin projects operating in these areas:
DeFi altcoin projects
USD Coin (USDC)
Binance USD (BUSD)
UNUS SED LEO (LEO)
Report discusses market impact of stablecoins
In another thread, the report cites the numerous dangers that are often highlighted, such as the possible collapse of a particular stablecoin, which poses a serious threat to the stability of the overall crypto ecosystem due to the dominant trading volumes of stablecoins. The FSB also warns of the dangers of rapid DeFi adoption and the consequent lack of openly recognized intermediates, as well as the possibility of increased financial sector involvement.
The FSB also addressed the dangers of data gaps in the crypto industry due to the “lack of transparent, consistent and reliable data on the cryptocurrency markets and their links to the mainstream financial system.” The report notes that “these data gaps make it impossible to predict the full breadth of the use of cryptocurrencies in the financial system,” noting that such gaps make it difficult to detect and quantify the risks associated with the crypto market. Officials say that “data on public blockchains is pseudonymous by design” because it is “impossible to identify individuals engaged in cryptocurrency activities.”
Data gaps regarding DeFis
The FSB identifies a number of data gaps, including the percentage of households investing in cryptocurrencies, the amount of crypto fraud, access to the financial sector, owners, number and value of payments industry transactions, and more. According to the group, “survey-based metrics are not adjustable and are updated infrequently or occasionally.” The Financial Stability Board cites DeFi-related data gaps such as the unknown percentage of individual and corporate participation, the number of decentralized applications in a blockchain project, and leverage indicators, among other things.