Instability in crypto-asset markets is a reminder of the risks and underlines the need for regulation

Abstract

The instability seen in crypto-asset markets has had very little effect on the global financial system, but the growing and partially hidden linkages between markets are a cause for concern. The introduction of distributed ledger technology (DLT) in the financial markets may also create new risks. The sector needs tighter regulation and supervision particularly because of failures that have been related to investor protection and anti-money laundering measures. Europe is leading the way in regulating the sector, with the adoption of the Markets in Crypto-Assets Regulation (MiCA).