Comment: FSB warns of crypto risks

The Financial Stability Board warns of emerging risks from crypto assets to global financial stability. Christoph Gugelmann, CEO at Tradeteq, comments on the implications for investors and the role of trade finance.

Global stablecoins do indeed present risks to financial stability but in the move to regulate, we risk overlooking other practical solutions to crypto’s rising popularity. It’s true stablecoins pegged to fiat currencies are prone to volatility but what if we anchored them in real-world assets?

Trade finance is one example of an ideal reserve pool for stablecoins and is becoming widely available to investors as an alternative asset. It is based on the tangible flow of physical goods and default rates are low, making it less susceptible to volatility.

Regulation is critical but it’s not the only approach. Simply rethinking strategies around crypto investments could bring much needed stability.