Fed: Crypto no longer included in top 10 most-cited potential risks

Category: Americas Blockchain Crypto
Posted by Teuta

Crypto and stablecoins are surprisingly omitted from the latest US Federal Reserve report of the most-cited potential economic and financial risks. 

Fed’s top 10 most-cited potential risks

The new top 10 most-cited potential risks are persistent inflation and monetary tightening, Russia’s invasion of Ukraine; market liquidity strains/volatility; higher energy prices and potential for a China/Taiwan conflict. These are followed by under-regulated nonbanks; Europe recession; supply chain disruptions; the value of the U.S. dollar, and emerging market economy risks, according to the Fall 2022: Most-cited Potential Risks Over the Next 12-to-18 Months report.

According to the report, respondents remained “concerned about the prospect of inflationary pressures being more persistent than anticipated.”

But Fed still anti-crypto

However, the Fed retains its anti-crypto stance when assessing the risks associated with crypto investing. It said in the research that several cryptocurrencies, including BTC, Ether, BNB, Cardano, and XRP, had lost almost 69 percent of their value from their all-time high in November 2021.

“Speculation and risk appetite appear to be the primary driving forces of crypto-asset prices, which have recorded big swings in recent years,” the report read.

The Fed also referenced the collapse of the Terra ecosystem, noting that firms with direct exposure to the in-house stable TerraUSD (UST) experienced financial difficulties, resulting in certain cases in insolvency.

“TerraUSD largely lacked assets to back its value, and, as with many other stablecoins, its demand was mainly driven by the return that investors could earn,” it added.

Moreover, cryptocurrency/ stablecoins were included in the top 14 most-cited potential risks in the Fed’s Spring 2022 report.

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