EU watchdog warns about the risk of a bank run on stablecoins
As the crypto industry continues to develop reciprocal connections with traditional finance, the risks posed by a sudden crisis of the former to the global economy are rising. Such is the opinion of the European Systemic Risk Board (ESRB), which calls for tightening the scrutiny of the digital assets market.
On May 25, the ESRB — an oversight body within the European Central Bank — published its report on crypto assets and decentralized finance (DeFi). The central thesis of the 77-page document is that the volatile crypto industry is growing, and its interconnectedness with the mainstream financial market is increasing. While the shocks of 2022 in crypto didn’t trigger the same amount of damage in TradFi, the current risk monitoring system is insufficient to track troubling tendencies in years to come.