The post FSB Warns Crypto Nearing Tipping Point as Stablecoins Deepen TradFi Ties appeared on BitcoinEthereumNews.com.

The Financial Stability Board (FSB) is sounding the alarm on growing risks from the crypto sector, warning that interlinkages with traditional finance are nearing a critical threshold. Speaking in Madrid on Thursday, outgoing FSB Chair Klaas Knot said that while crypto does not yet pose a systemic risk to traditional finance, that status may not last much longer. “We may be approaching a tipping point here,” he said. Knot noted that entry barriers for retail investors have “dropped significantly,” particularly with the introduction of crypto exchange-traded funds. Crypto ETFs allow investors to gain exposure to digital assets without managing private keys, using crypto wallets or navigating exchanges. Knot added that another area of concern is the stablecoin market. He noted that issuers now hold large amounts of US Treasurys, which increases interlinkages between crypto and traditional finance. “That’s a segment that we clearly must monitor closely,” he added. FSB Chair Klaas Knot speaking in Madrid. Source: YouTube Related: Société Générale launches US dollar stablecoin on Ethereum and Solana Stablecoins are embedded into financial systems Stablecoins — digital assets pegged to fiat currencies like the US dollar — are becoming increasingly embedded into financial systems. According to data from DefiLlama, the total market cap of stablecoins is more than $251 billion. A recent research paper by the Bank for International Settlements analyzed the growing impact of stablecoins on traditional finance, focusing on their influence on short-term US Treasury yields. By using daily data from 2021 to 2025 and an instrumental variable method, the paper found that stablecoin inflows lower three-month Treasury yields by 2–2.5 basis points within 10 days, while outflows raise yields by 6–8 basis points. These effects are concentrated in short-term maturities, with minimal impact on longer-term bonds. Among issuers, USDt (USDT) has the largest effect, followed by Circle’s USDC (USDC),…

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Filed under: News - @ June 13, 2025 3:28 am