According to the European Central Bank, the significant development in the size and complexity of cryptocurrency markets indicates that the sector may pose a financial stability risk that requires immediate attention.
While recent volatility has not had a significant impact on the global financial system, the risk is growing as institutional investors become more involved.
ECB officials have stepped up warnings about cryptocurrencies in recent days
“The crypto-asset markets are currently showing all indicators of an emerging risk to financial stability, based on events observed to date.” “Global regulatory coordination is required since this is a worldwide market and a global problem,” the central bank stated.
The ECB has increased its warnings and urged stronger regulation of the TerraUSD stablecoin as it dropped from its supposed dollar peg earlier this month.
The ECB stated that “any additional initiatives that allow the traditional financial sector to expand its interface with the crypto-asset market space must be carefully assessed.”