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    QONEQT in Crypto News

    28-Oct-2022 11:20 AM


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    CFTC commissioner compares crypto contagion risk to 2008 financial crisis

    Commodity Futures Trading Commission’s (CFTC) Christy Goldsmith Romero has pointed to the collapse of the Terra ecosystem and its flow-on effects as an example of how contagion risks within crypto markets are similar to those experienced by the traditional financial (TradFi) system during the global financial crisis (GFC) of 2008.
    Romero suggested in a speech given at the International Swaps and Derivatives Association’s (ISDA) Crypto Forum on Oct. 26 that increased links between crypto markets and TradFi increases the risk posed by crypto to overall financial stability, noting: “The digital asset market remains relatively small and contained from the level of systemic risk that would come with greater scale or interconnections with the traditional financial system.
    But this may not be the case in the near future, particularly given growing interest by traditional finance.”
    The GFC came about after banks began to lend recklessly to people without the means to fully pay back their mortgages.
    These ‘subprime’ mortgages were bundled together and sold as safe investment products before defaults started a ripple effect that spread across the world.
    One of the more recent CFTC actions was the fine levied at the Ooki DAO and its members, which was heavily criticized by a CFTC commissioner and members of the crypto community, who referred to it as “blatant regulation by enforcement.”
    Source: Cointelegraph
    #crypto