The European Systemic Risk Board (ESRB) has proposed limiting crypto entities’ token lending and controlling high leverage.
The ESRB, which is an observer of the European Union, stated that the European Union officials should work extensively to prevent financial stability from being compromised. Among these studies, the ESRB suggested that highly leveraged transactions should be avoided.
ESRB Draws Attention to Leveraged Crypto Transactions
The European Systemic Risk Board (ESRB) has made several recommendations to the European Union on crypto. Among these suggestions, it was noteworthy to mention leveraged crypto transactions.
The ESRB believes that the issues it advises will cause financial stability problems or harm the individual investor. The ESRB aims to request regular reports from companies venturing into the crypto sector and create specific rules for large firms.
The Terra and FTX crises shed light on these suggestions, with the Bitcoin price dropping by close to 77 percent. In the report published by the ESRB, it was stated that systemic risks can emerge rapidly. The European Union watchdog suspects that the crypto market, which has grown strongly over the years, will bring risks.
Sharing a statement for the recently approved MiCA, the ESRB recommended limiting leveraged transactions involving crypto assets and controlling high leverages.
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