Crypto-assets markets are fast evolving and could reach a point where they represent a threat to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system. The rapid evolution and international nature of these markets also raise the potential for regulatory gaps, fragmentation or arbitrage. Although the extent and nature of use of crypto-assets varies somewhat across jurisdictions, financial stability risks could rapidly escalate, underscoring the need for timely and pre-emptive evaluation of possible policy responses.  

Crypto-asset market capitalisation grew by 3.5 times in 2021 to $2.6 trillion, yet crypto-assets remain a small portion of overall global financial system assets. Direct connections between crypto-assets and systemically important financial institutions and core financial markets, while growing rapidly, are limited at the present time. Episodes of price volatility have, so far, been contained within crypto-asset markets and have not spilled over to financial markets and infrastructures. Moreover, currently crypto-assets are not widely used in critical financial services (including payments) on which the real economy depends. However, it is challenging to assess inflection points given the rapid evolution of these markets and the significant data gaps that impede authorities’ risk assessments. These gaps stem, in part, from the fact that participants, products and markets, including crypto-asset trading and lending platforms, fall outside the regulatory perimeter and the associated reporting requirements or, in some cases, may be failing to comply with applicable laws and regulations. These data gaps make it difficult to assess the full scope of crypto-assets’ use in the financial system.