FRANKFURT: The recent collapse of a major cryptocurrency exchange platform that has sent shockwaves through the largely unregulated sector is “not a surprise”, a top European Central Bank official said Wednesday.
The popular FTX platform filed for bankruptcy in the United States last week with a reported $8-billion hole in its finances, sparking a confidence crisis among investors and dragging down key currencies like bitcoin.
ECB vice-president Luis de Guindos said the FTX failure “is not a surprise”, given the “vulnerabilities and the weaknesses” of the burgeoning crypto industry.
But he said the turmoil remained confined to the crypto asset space and had not yet had any spillover effects.
“So far it did not have implications in terms of financial stability for the broader financial markets,” de Guindos told reporters in a call.
But he acknowledged there were “obscure channels” between “the crypto space and the rest of the financial market”, which the ECB was already watching “carefully”.
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