Outgoing Financial Stability Board Chair Klaas Knot has warned that crypto may pose a threat to global financial stability, citing growing connections between crypto and traditional finance.
The FSB has long maintained that “crypto does not yet pose a systemic risk, but recent developments suggest we may be approaching a tipping point,” Knot said while speaking in Madrid on Thursday.
He pointed to the role of stablecoins in linking the two financial systems. “Stablecoin issuers, for example, now hold substantial amounts of U.S. Treasuries. This is a segment we must monitor closely.”
Retail traders access to crypto
Knot also flagged the rapid growth in retail crypto access via exchange-traded funds.
“Barriers for retail users have dropped significantly, particularly with the introduction of crypto ETFs. The interlinkages with the traditional financial system continue to grow,”Knot said.
While noting that crypto’s rise has been driven in part by inefficiencies in cross-border payments, Knot emphasized the need for appropriate regulation. “The crypto ecosystem will continue to evolve — and so must our regulatory frameworks.”
He said jurisdictions are actively developing rules, and that “the FSB’s recommendations offer a common foundation. This is especially important given the inherently cross-border nature of crypto.”
Knot also discussed parallel concerns with climate change and the financial sector’s preparedness.
But he ended by underscoring the importance of global coordination across all areas: “Financial stability is an international public good. Every single issue I have mentioned today — NBFI, banking, crypto, payments, climate — they all cross borders. And so must our response be.”
Knot’s term at the FSB ends June 30. Bank of England Governor Andrew Bailey will succeed him.
