Financial Stability Board Chair Klaas Knot warned on June 12th in Madrid that whilst the FSB has long maintained that crypto does not yet pose a systemic risk, recent developments suggest we may be approaching a tipping point.
Knot highlighted that barriers for retail users have dropped significantly, particularly with the introduction of crypto ETFs, and interlinkages with the traditional financial system continue to grow. Stablecoin issuers now hold substantial amounts of US Treasuries, which represents a segment that must be monitored closely according to the FSB. Bank for International Settlements research shows stablecoin inflows lower three-month Treasury yields by 2-2.5 basis points within 10 days, whilst outflows raise yields by 6-8 basis points. The total stablecoin market capitalisation exceeds $251 billion according to DefiLlama data, with USDt having the largest effect followed by Circle's USDC in Treasury market influence. The US Senate on Wednesday voted 68-30 to advance the GENIUS Act, which would create a national framework for stablecoin issuance.
The outgoing Knot, who steps down on June 30th, emphasised that as the crypto ecosystem continues to evolve, regulatory frameworks must also develop, particularly given crypto's inherently cross-border nature, and effective implementation must extend beyond the G20 with strong regulatory and supervisory cooperation.
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