ECB Evaluates Impact Of Deregulated Crypto Ecosystem On Financial Markets

According to PANews, the European Central Bank (ECB) is assessing the impact of a more deregulated cryptocurrency ecosystem on financial markets. In a memorandum from its January monetary policy meeting, the ECB highlighted concerns that the U.S. administration under U.S. President Donald Trump, with its lenient stance on crypto assets, could pose long-term risks such as leverage and overvaluation issues. The ECB warned that deregulation in the U.S. financial system, particularly in the crypto asset sector, might heighten financial stability risks and potentially lead to future financial crises. Recently, there has been a noticeable relaxation in the regulation of the U.S. crypto market, exemplified by the U.S. Securities and Exchange Commission (SEC) withdrawing several lawsuits against cryptocurrency exchanges. Despite the rapid growth of the cryptocurrency market, the ECB remains cautious about its risks and regulatory challenges, considering it a potential long-term threat to global financial stability.