The ECB Crypto-Assets task force group which over-watches the growth of cryptocurrencies and their potential impact on the financial system has published its May report on key events in the crypto industry.
Crypto is not a Threat to the Global Financial System
The authors of the document admit that the cryptocurrency market is currently not a threat to the EU or the global financial system. It looks like they made this conclusion when the market capitalization of virtual currencies was around $107 billion, in January 2019. However, this figure now has risen to $276.3 billion which is almost three times more than it was January.
The authors draw attention to the fact that the market capitalization of the crypto market accounts for only 4% of popular FAANG shares. Or in different measures – only 1% of EU GDP. However, despite the small share of this sector, in relation to the rest of the financial system, the ECB document still insists on a “united crypto regulation course”.
Other country regulations ineffective in the long run.
A number of uncoordinated and inconsistent approaches at other national levels may result in ineffectiveness, reads the document. The ECB considers that abandoning such an approach will result in regulatory acts disrupting “the stability of the financial system which is linked to the crypto asset market”.
For the time being, ECB researchers are the only group of regional regulators who examines cryptocurrencies as the threat of the existing financial system.
Not so long ago, the head of ECB Mario Draghi also announced that cryptocurrencies are a risky asset category, and in fact, it is not money. He then pointed out that “the size of the crypto market is not large enough for central banks to start the process of regulation”.