Istituto di Economia Internazionale - Crypto-Asset Markets: Structure, Market Developments in 2022 and Policy Considerations

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Corresponding Author:
Giorgio Abate, Directorate General for Markets and Payments Systems, Bank of Italy, Rome

Coauthors:
Nicola Branzoli, Directorate General for Economics, Statistics and Research, Bank of Italy, Rome
Raffaele Gallo, Directorate General for Economics, Statistics and Research, Bank of Italy, Rome

Crypto-Asset Markets: Structure, Market Developments in 2022 and Policy Considerations

Volume 76 - Issue 3 - The Evolving Cryptoecosystem: Implications for the Financial Services Markets, August 2023
(pp. 353-386)
JEL classification: G0; G1; G18
Keywords: Cryptoassets; Financial Stability; Stablecoin; Decentralized Finance; Leverage; Investor Run

Abstract

This paper provides a conceptual framework to analyse risks and vulnerabilities in crypto-asset markets and describes the episodes of stress observed in these markets in 2022. The analysis is used to provide preliminary policy considerations that are relevant for financial stability. We highlight the importance of setting a clear perimeter for financial regulation and of developing global rules to address financial stability risks in the areas covered by financial regulation following the principle “same risk, same regulatory outcome”. Authorities could discourage and monitor exposures of supervised or overseen operators to areas not directly covered by financial regulation while trying to incentive the adoption of safe and sound risk management practices by entities involved or operating in these areas. Finally, we provide concrete proposals to implement these considerations.

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Crypto-Asset Markets: Structure, Market Developments in 2022 and Policy Considerations

Abstract

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Institute for International Economics of the Genoa Chamber of Commerce

Institute for International Economics
of the Genoa Chamber of Commerce