Talking to the Financial Times, Benoit Cœuré, who heads the BIS Innovation Hub, suggested the Financial Stability Board (FSB) is the most likely forum for global regulators to agree on a consistent regulatory framework for crypto-assets. In October, the FSB published a review of stablecoin regulation and previously made high level recommendations about regulating stablecoins.
Cœuré said that decentralized finance (DeFi) had been a wake-up call because of its rate of growth and the “interconnectedness with traditional finance which creates potentially new forms of systemic risk”. He was referring to stablecoins being the bridge between crypto-assets and traditional finance.
DeFi enables cryptocurrencies to be traded or lent without a centralized intermediary, apart from a piece of software code. More often than not, stablecoins represent the settlement asset for both trading and lending. DeFi has grown from $1 billion in assets in June 2020 to $234 billion today (DeFi Llama).
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