The Financial Stability Board (FSB) report, along with other sources, offers significant insights into the impact of multifunction crypto-asset intermediaries (MCIs) and key market events, such as the collapse of FTX in November 2022 and the crypto-asset market turmoil in May/June 2022. These events have underscored the crucial role and potential risks posed by MCIs in the crypto-asset markets.
MCIs are firms or groups of affiliated firms providing a wide range of services and products centered around a trading platform. Many engage in proprietary trading and investment, while some issue, promote, and distribute crypto-assets, including stablecoins. The structural vulnerabilities they can exacerbate in the markets include issues related to leverage and liquidity mismatch. Their vulnerabilities are akin to traditional finance, such as technology and operational vulnerabilities, leverage, liquidity mismatch, and interconnections….
