The collapse of crypto companies involved in multiple activities is not a major threat to “the real economy”, according to a report from the Financial Stability Board (FSB) published on Tuesday.
The international standards body’s report also notes that more assessments are needed because “significant information gaps still remain.”
The FSB, which monitors financial systems and proposes rules to help prevent financial crises, said it was assessing the financial stability implications of multi-function cryptoasset intermediaries (IMCs) in July. According to the FSB, MCIs are individual companies or groups of affiliated companies that combine a wide range of services, products and functions usually focused on the operation of a trading platform. This could apply to numerous cryptocurrency heavyweights, such as Coinbase or Binance.
The FSB warns that crypto companies that combine different activities are more vulnerable to failure and that mitigating the impact of such failure depends on how well global crypto regulation is implemented. The report also identified “information gaps” that require greater cross-border cooperation and information sharing.
The report found that the vulnerabilities of IMCs and traditional financial sector companies are not very different. However, vulnerabilities increase when IMCs engage in proprietary trading, market making in their own trading venues, and lending and borrowing.
The FSB said it is necessary to assess whether BWI disclosure and reporting requirements are adequately covered or would justify additional measures.
“The combination of functions in IMCs that are normally restricted or separated for traditional finance appears prima facie inconsistent with the ‘same activity, same risk, same regulation’ principle,” the report says.
Read more: Blanket Cryptocurrency Bans Won’t Work, IMF and FSB Warn in Joint Paper
