The Central Bank of the US under the Fed Reserve System gave a report that crypto assets are no longer in the top 10 most-cited potential threats to the economy over the next 12 to 18 months. The report was given to ascertain the financial stability of the United States financial system.
The report highlighted a number of international dangers that, if they materialize, could harm the U.S. financial stability. Some of the risks that were mentioned in the report ahead of cryptocurrencies/stablecoins include Russia’s invasion of Ukraine, monetary tightening, risk assets valuation, cyberattacks, high energy prices, Corporate credit stress, and COVID-19 variants.
The paper asserted that stablecoins are an essential tool for investors in digital assets, despite the fact that they currently have a very low market value and are not widely used by institutions or ordinary investors as a tool for managing funds.
The market capitalization of digital assets has dropped by 2.5% to $1.03 trillion since the previous Financial Stability Report after experiencing a much larger decline earlier in the year following the collapse of TerraUSD, which resulted in investor outflows and declines in coin value.
The Use of Crypto to Drive the Economy
Cryptocurrency has been viewed as an alternate instrument to help the economy grow in the face of ongoing economic decline. Hong Kong is considering enabling retail investors to participate directly in virtual assets in response to a talent exodus that is decimating the city’s cryptocurrency industry.
Elizabeth Wong, Director of Licensing and Head of the Fintech Unit at SFC Hong Kong, asserts that private investors should be permitted to trade digital assets because the Hong Kong blockchain industry has improved its compliance during the previous four years.
In India, the development of Standard Operating Procedures (SOPs) for cryptocurrencies was announced by India’s Finance Minister Nirmala Sitharaman during the country’s G20 chairmanship, which runs from December 1, 2022, to November 30, 2023.
In related news, Kassym-Jomart Tokayev, the president of Kazakhstan, reportedly told local media that his country is willing to consider converting cryptocurrency to fiat money if there is a large demand. The president also emphasized the necessity of both relevance and security for the project to receive full legal legitimacy.
Meanwhile, The Astana Financial Services Authority (AFSA) of Kazakhstan has granted Binance, the largest cryptocurrency trading platform in the world by trade volume, preliminary approval to operate there.
