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.”
One area of TradFi the commissioner would prefer to remain distant from crypto is retirement and pension funds.
These “subprime” mortgages were bundled together and sold as safe investment products before defaults started a ripple effect that spread across the world.
Before this action, decentralized autonomous organizations (DAOs) were regarded by many advocates as being “above the law,” and have resulted in the formation of legal entities within DAOs as a way to limit liability.
Source: Cointelegraph
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