Crypto markets may pose risks to wider financial stability, ECB warns – Reuters

Crypto markets may pose risks to wider financial stability, ECB warns – Reuters

FRANKFURT, May 24 (Reuters) - Cryptocurrencies will pose a risk to financial stability if the emerging sector maintains its rapid growth of the last two years and financial firms deepen their involvement, the European Central Bank (ECB) said on Tuesday.

The crypto market slumped sharply this month after the downfall of major "stablecoin" terraUSD. The crash has led to calls from the world's top financial leaders for "swift and comprehensive" regulation of the sector. read more

Cryptocurrencies - historically a niche asset favoured by risk-hungry investors, exploded in size during the COVID-19 pandemic. Institutional investors especially were drawn by claims that bitcoin acts as a hedge against inflation and offers high returns in the face of low interest rates.