Owing to the Volatility of cryptocurrencies, it is often dismissed as a potential risk to the financial ecosystem, however, a recent survey by the Federal Reserve Bank of New York now suggests that other factors topple cryptocurrencies in terms of associated risk in 2022.
According to the survey published by the Federal Reserve System, factors like Russia’s invasion of Ukraine, persistent inflation, and foreign divestments top the list of the most cited potential risks for the US economy.
This survey is indicative of the continued education campaign efforts carried out by entrepreneurs to educate the masses. With crypto now at 11th place out of the top 14 factors that pose a financial risk to the economy, it’s evident that there is a change in investors’ mindsets.
Although there is positive growth regarding the adoption of digital assets the regulator still maintains its anti-crypto position pertaining to risk evaluation in crypto investments.
To buttress its position, it cited the crash of cryptocurrencies like Bitcoin (BTC), Ether (ETH), Cardano (ADA), and XRP (XRP) which are all down by over 50% compared to their peak.
Furthermore, the Central Bank also referenced the collapse of the Terra-Luna ecosystem which saw firms with massive exposure suffer a liquidity crisis eventually leading to the bankruptcy of some of these firms.
In addition, the report also revealed the Federal Reserve’s plan to fully monitor and assess financial risks that will arise from a change in the climate. They will also assess risks both to the individual financial system and to the financial institution at large.
Impact of the Russian-Ukraine War on the Crypto Ecosystem
Notably, the Russian-Ukraine crisis impacted all aspects of life, the cryptosphere inclusive. The Eastern Europe region last month suffered a high risk of crypto activities borne from interaction with high-risk crypto exchanges.
Meanwhile, El Salvador’s president earlier this month predicted that a more reliable decentralized system will soon take over the central banking system used in western nations.
Similarly, as reported by thecoinrise.com, UK parliamentarians were in support of regulating crypto as a financial instrument. According to the reports, crypto should be treated like other forms of financial assets.