EU financial regulators: Digital assets and DeFi pose risks and may require new regulations

ChainCatcher news, the EU financial stability regulator has stated that the digital assets and decentralized finance (DeFi) sector may pose systemic risks to the economy, and new regulations may need to be developed to cover large crypto groups and smart contracts.

The European Systemic Risk Board (ESRB) warned in a report on Thursday that while MiCA sets governance, licensing, and reserve requirements for participants such as wallet providers and stablecoin issuers, it overlooks the risks present in areas like crypto lending and collateralization, as well as the high leverage in the digital asset market, which could pose significant risks to consumers. The report stated that, under a policy option, DeFi developers may need to comply with specific regulations regarding the design and creation of smart contracts. (CoinDesk)