The G20’s Financial Stability Board (FSB) said on Thursday it would take steps to tackle “vulnerabilities” and data gaps in decentralised finance (DeFi) highlighted by the collapse of cryptocurrency exchange FTX last year.
The fast-growing and unregulated DeFi segment offers trading, borrowing and lending in cryptocurrency assets by using public blockchains to record transactions, with no central control.
“The fact that crypto-assets underpinning much of DeFi lack inherent value and are highly volatile magnifies the impact of these vulnerabilities when they materialise, as recent incidents demonstrate,” the FSB said in a report to ministers from the Group of 20 (G20) major economies meeting next week.
FSB member countries will now “proactively” analyse vulnerabilities from DeFi as part of regular monitoring of crypto markets, the report said.
“Potential policy responses may include, for example, regulatory and supervisory requirements concerning traditional financial institutions’ direct exposures to DeFi,” it said.
This report’s information was first seen on REUTERS; to read more, click this link.
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