FILE PHOTO: Representations of cryptocurrencies are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
LONDON (Reuters) - More measures may be needed to stop blow-ups at complex crypto firms like FTX from destabilising the wider financial system, the global Financial Stability Board (FSB) said on Tuesday.
The FSB, which groups regulators, central banks and treasury officials from the G20 economies, said turmoil in crypto markets last year when FTX collapsed highlighted how "multifunction" crypto firms, that combine trading and other activities, can exacerbate vulnerabilities.
The vulnerabilities are similar to those found in traditional finance, including leverage, liquidity mismatches, technology and operational vulnerabilities, the FSB said in a report.
"These vulnerabilities are further amplified by a lack of effective controls and operational transparency, poor or no disclosures, and conflicts of interest," it said.
Evidence suggests that the threat to wider financial stability and the economy is limited at present, it added.
The FSB and IOSCO, a global body of securities watchdogs, have already published this year high level recommendations for supervising crypto activities.
Regulators, however, should assess whether these measures adequately stop risks from crypto being amplified across the financial system, the report said.
"Further work may be needed to enhance cross-border cooperation and information sharing and to address information gaps identified in the report," the FSB said.
(Reporting by Huw Jones; Editing by Kirsten Donovan)
