Stablecoins and crypto ETFs are drawing closer to core financial markets, raising alarms among global regulators
The head of the Financial Stability Board (FSB) has warned that crypto assets may soon pose a serious threat to global finance.
Speaking in Madrid on Thursday, Klaas Knot said, “At the FSB, we have long maintained that crypto does not yet pose a systemic risk, but recent developments suggest we may be approaching a tipping point.” Bloomberg reported.
Knot, who also leads the Dutch central bank, pointed to the growing presence of stablecoins in traditional markets. Stablecoin issuers “now hold substantial amounts of US Treasuries — this is a segment we must monitor closely,” he added.
This warning marks a shift from earlier assessments that downplayed the sector’s systemic relevance.
Stablecoin exposure highlights increasing market entanglement
The warning aligns with a broader shift in tone from regulators. In its May Financial Stability Review, the European Central Bank (ECB) flagged crypto assets, including stablecoins, as a growing risk, citing rising valuations and deeper connections with traditional finance.
In the United States, Congress is currently debating legislation that could establish the first comprehensive regulatory framework for stablecoin issuers.
Some of the largest financial institutions and crypto industry stakeholders have backed the initiative, which may set new standards for reserve requirements and disclosure.
Knot also referenced the role of exchange-traded funds (ETFs) in lowering the barrier for retail crypto investment.
“Barriers for retail users have dropped significantly, particularly with the introduction of crypto ETFs,” he said. “The interlinkages with the traditional financial system continue to grow.”
Global regulators brace for evolving risks
Knot’s remarks reflect the mounting urgency among policymakers to get ahead of the curve. “The crypto ecosystem will continue to evolve — and so must our regulatory frameworks,” he said.
He is set to step down as chair of the FSB and from his role at the Dutch central bank on June 30.
Bank of England Governor Andrew Bailey will take over at the international financial watchdog, while the Dutch government has yet to announce his successor.
