FSB warns that cryptocurrency is approaching a 'tipping point' as its relationship with TradFi deepens.

The Financial Stability Board (FSB) is issuing warnings about the increasing risks from the cryptocurrency sector, emphasizing that the links to traditional finance are approaching a critical threshold.

Mr. Knot noted that the barriers to entry for retail investors have "decreased significantly," especially with the launch of ETF funds. These ETF funds allow investors to access digital assets without needing to manage private keys, use cryptocurrency wallets, or navigate exchanges.

Additionally, he expressed concern about the stablecoin market. He pointed out that issuers are currently holding a large amount of U.S. Treasury bonds, which increases the linkage between cryptocurrency and traditional finance. "That is a segment we need to monitor closely," he emphasized.

Stablecoin is increasingly being integrated into the fintech system

Stablecoin — digital assets pegged to fiat currencies like the US dollar — are becoming increasingly popular in financial systems. According to data from DefiLlama, the total market capitalization of stablecoins has now surpassed 251 billion USD.

A recent study by the Bank for International Settlements analyzed the increasing impact of stablecoins on traditional finance, focusing on their influence on short-term U.S. Treasury yields.

Using daily data from 2021 to 2025 and the instrumental variable method, the study shows that inflows into stablecoins reduce the three-month bond yield by 2–2.5 basis points within 10 days, while outflows increase the yield by 6–8 basis points.

These impacts are primarily focused on the short-term maturities, with minimal effect on long-term bonds. Among the issuers, USDt has the largest impact, followed by Circle's USDC, confirming the important role of stablecoins in the treasury bond markets.

Mr. Knot, who also serves as the President of the Dutch Central Bank, De Nederlandsche Bank, will resign from both positions on June 30. The Governor of the Bank of England, Andrew Bailey, is expected to succeed him at the FSB, while the Netherlands has yet to announce a replacement.

The US Senate is proceeding with the GENIUS Act

On Wednesday, the U.S. Senate voted 68-30 to advance the Guide and Establish National Innovation for U.S. Stablecoins Act, also known as the GENIUS Act, an important bill aimed at establishing regulatory clarity for dollar-backed digital assets. This vote paves the way for floor debate and a final vote before the bill is sent to the House of Representatives.

If passed, the bill will create a national legal framework for the issuance of stablecoins, thereby enhancing the global competitiveness of the U.S. digital asset industry.

Mr. Teacher