Hong Kong believes stablecoin volatility can spillover to traditional finance

The fall of crypto giants this year reignited questions about the stability of cryptocurrencies and their impact on fiat ecosystems. Hong Kong Monetary Authority (HKMA) assessed the situation and found that the instabilities of crypto assets, including asset-backed stablecoins, can potentially spill over to the traditional financial system.

The HKMA assessment on asset-backed stablecoins pointed out the risks of liquidity mismatch, negatively impacting their stability during “fire-sale”…

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