Financial entities are not immune to the risks of crypto
Scope considers that financial entities are not immune to the risks of the crypto system despite the small size of the cryptocurrency market
Scope, a rating agency, pointed out that the cryptocurrency market is quite small with only 250 billion dollars, but they are still a danger to the traditional financial system. Financial institutions are not immune to the risks of the cryptographic system, especially if users demand services in that area.
According to the firm, the biggest fear in the crypto system is caused by the absence of “regulation and supervision of crypto assets”, so that they may gradually flow into traditional financial markets, contaminating them with new risks.
The company further maintains that the crypto market is made up mostly of small investors, and many of them execute “predominantly speculative or hedging operations” and are unaware of the true nature of cryptocurrencies or the underlying risks.
While institutional investors, especially hedge funds and investment funds such as ETFs focused on cryptocurrencies, are becoming more numerous.
The agency highlights: “This inherently jeopardizes financial stability. Not only because the funds invest other people’s money, but also because of the intense use of leverage on a much larger scale.”
That is why financial regulators are paying more and more attention to the “threat posed by the growing interconnection of cryptocurrency markets with traditional financial markets.”
M. Rodríguez
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Source: themoneypost.io
