Fun

News Feed - 2023-10-12 01:10:56

Martin Young4 hours agoDecentralized finance yet to pose ‘meaningful risk’ to stability — EU regulatorThe European Securities and Markets Authority argued that DeFi was still too small to pose any sizeable risks to overall financial stability, but should be monitored.1227 Total views37 Total sharesListen to article 0:00NewsJoin us on social networksDecentralized finance (DeFi) is yet to pose a meaningful risk to overall financial stability but does require monitoring, according to the European Union’s financial markets and securities regulator.


On Oct. 11, the European Securities and Markets Authority (ESMA) released a report titled “Decentralized Finance in the EU: Developments and Risks.” Aside from discussing the nascent ecosystem’s benefits and risks, the regulator concluded it is yet to pose a sizeable risk to financial stability.“Crypto-assets markets, including DeFi, do not represent meaningful risks to financial stability at this point, mainly because of their relatively small size and limited contagion channels between crypto and traditional financial markets.”


The total crypto market capitalization is just over $1 trillion, and DeFi’s total value locked (TVL) is a mere $40 billion, according to DefiLlama. Comparatively, the total assets of financial institutions in the EU amounted to around $90 trillion in 2021, according to the European Commission.DeFi TVL by protocol type. Source: ESMA


The report said that the total crypto market is about the same size as the EU’s 12th largest bank, or 3.2% of the total assets held by EU banks.


The ESMA also looked into several crypto contagions of 2022, including the collapse of the Terra ecosystem and FTX, noting that this crypto “Lehman moment” still had “no meaningful impact on traditional markets.”


Nevertheless, the regulator observed that DeFi has similar traits and vulnerabilities to traditional finance, such as liquidity and maturity mismatches, leverage and interconnectedness.


It also highlighted that, although investors’ exposure to DeFi remains small, there are still serious risks to investor protection due to the “highly speculative nature of many DeFi arrangements, important operational and security vulnerabilities, and the lack of a clearly identified responsible party.”


It cautioned that this could “translate into systemic risks if the phenomenon were to gain significant traction and/or if interconnections with traditional financial markets were to become material.”


Related:EU’s new crypto law: How MiCA can make Europe a digital asset hub


Furthermore, the report identified a “concentration risk” associated with DeFi activities.


“DeFi activities are concentrated in a small number of protocols,” it noted, adding that the three largest ones represent 30% of the TVL.Top 10 DeFi protocols by TVL. Source: ESMA


“The failure of any of these large protocols or blockchains could reverberate across the whole system,” it said.


The regulator is paying much closer attention to DeFi and crypto markets following the publication of its second consultative paper on the Markets in Crypto-Assets (MiCA) regulations earlier this month.


Collect this article as an NFTto preserve this moment in history and show your support for independent journalism in the crypto space.


Magazine:Bitcoin is on a collision course with ‘Net Zero’ promises# Europe# Finance# European Union# DeFiAdd reactionAdd reactionRead moreHow to earn passive income with peer-to-peer lendingVitalik Buterin’s Privacy Pool proposal is just the startDAOs need to learn from Burning Man for mainstream adoption

News Feed

Spanish Crypto ATM Company Bitbase Eyes European and Latam Expansion
Spanish Crypto ATM Company Bitbase Eyes European and Latam Expansion Bitbase, a Spanish cryptocurrency ATM company, is planning to keep expanding its services in 2023. The company,
Savannah Fortis10 hours agoSam Bankman-Fried blamed Binance for balance sheet leak to media: Court evidenceAn internal document was revealed in court showing Sam Bankman-Fried believed Binance leaked Alameda’s balance
Dow Runs Out of Gas on Tired Trade War Deja Vu
The Dow Jones was up a measly 50 points on Friday as positive data and trade war developments failed to meaningfully lift the stock market. | Source: Brendan Smialowski / AFPThe Dow
Bitcoin Mining Rigs Struggle for Profits, Despite BTC’s Hashrate Reaching an All-Time High
Bitcoin Mining Rigs Struggle for Profits, Despite BTC"s Hashrate Reaching an All-Time High Bitcoin’s hashrate climbed to an all-time high (ATH) this week t
Weiss Ratings Report Claims Crypto-Backed Home Loans Spell Trouble
Weiss Ratings Report Claims Crypto-Backed Home Loans Spell Trouble A report published on May 2 by the rating agency Weiss Ratings warns that crypto-backed mortgages “spell r
China Opposes Recent US Sanctions for Chinese Firms, Criticizes ‘Long-Arm’ Jurisdiction Policies
China Opposes Recent US Sanctions for Chinese Firms, Criticizes "Long-Arm" Jurisdiction Policies The government of China protested the enactment of sanctions on a series of nationa
Ethereum L2 EigenLayer is last of ‘life-changing airdrops,’ experts say
Zhiyuan Sun4 hours agoEthereum L2 EigenLayer is last of ‘life-changing airdrops,’ experts sayIssues such as community discontent, farm accounts and restrictive criteria have plagued recent airdrops.1158 Total views2
ASI token merger phase 1 results in delisting of AGIX, OCEAN
Arijit Sarkar14 hours agoASI token merger phase 1 results in delisting of AGIX, OCEANThe initial phase of the ASI token merger sees AGIX and OCEAN tokens integrate into Fetch.ai’s FET with limited exchange support.3591
Adshares Establishes Premium Partnership With Sandbox
Adshares Establishes Premium Partnership With Sandbox press release PRESS RELEASE.Adshares (ADS) is putting another stake in Metaverse’s advertising territory through a partn
Elon Musk Hints Tesla Owns About 42K Bitcoins
Elon Musk Hints Tesla Owns About 42K Bitcoins Tesla CEO Elon Musk has hinted how many bitcoins Tesla owns after revealing that the fair market value of its bitco
Biggest Movers: SOL Moves Towards $35.00, XMR Extends Recent Gains
Biggest Movers: SOL Moves Towards $35.00, XMR Extends Recent Gains Solana rose for a second straight day on Thursday, as the token moved closer to its long-term resistance point of
Ezra Reguerra14 hours agoBitwise insists ‘no affiliation’ with startup facing SEC chargesBitwise Asset Management stresses it has no relationship with the startup Bitwise Industries, whose founders have been charged