FSB wants more data to gauge risk in Bitcoin, stablecoins and DeFi

Crypto market data reporting requires global standards for proper risk assessment, the FSB said.

The Financial Stability Board (FSB), a global financial authority funded by the Bank for International Settlements, has released a new report on financial stability risks associated with cryptocurrencies.

The 30-page research report, released Wednesday, details a range of financial risks associated with various types of cryptocurrencies and the industry, including private digital assets such as Bitcoin, stablecoins such as Tether (USDT), and decentralized finance. (DeFi).

The report mentions some oft-cited risks, such as the potential failure of certain stablecoins, which pose a significant threat to the stability of the entire crypto ecosystem due to their dominant trading volume. The FSB also pointed to risks associated with the rapid adoption of DeFi, and the associated lack of clearly identifiable intermediaries, potential increasing bank involvement, and more.

The FSB also pointed to the risks posed by data gaps in the crypto industry, warning of a “lack of transparent, consistent and trusted data on crypto asset markets and their linkages to the core financial system.”

“These data gaps make it difficult to assess the full extent of the use of cryptoassets in the financial system,” the FSB wrote, adding that these gaps severely hinder the ability to identify and quantify risks arising from the crypto industry.

"The data available on public blockchains is designed to be anonymous," the agency wrote, and "it is difficult to determine the identities of users involved in cryptoasset activities."

The FSB listed a number of data gaps, including the proportion of households investing in crypto assets, the amount of crypto fraud, exposure to banks, owners, the number and value of transactions in the payments industry and other industries. "Survey-based metrics are not customizable and are updated infrequently or irregularly," the group noted.

The FSB cited data gaps related to DeFi, such as the unknown share of retail versus institutional participation, the number of blockchain dapps, metrics to measure leverage, and more.

A spokesperson for the FSB told Cointelegraph: “The borderless nature of cryptoassets makes it difficult for us to get a full picture of these markets. As a result, cryptoasset data reported by different data sources can vary widely.” According to the agency, the crypto market’s The data gap is mainly due to "lack of standardized reporting requirements and oversight, or compliance with regulatory requirements".

A representative of the FSB told Cointelegraph that they have no information on the development of a globally standardized crypto reporting tool.