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FSB’s concerns about crypto asset intermediaries

Published: 14th Dec, 2023


Financial Stability Board (FSB)’s latest report on crypto-asset intermediaries sought measures to enhance cross-border cooperation and information sharing among local authorities.


Key Highlights-

  • Revenue Sources:
    • MCIs earn from transaction fees, blockchain infrastructure operations, proprietary trading, and diversified services.
    • Limited publicly disclosed information makes assessing revenue sources challenging.

Multi-function crypto-asset intermediaries (MCIs)

  • MCIs as firms providing various crypto services, such as trading, posing risks due to a lack of controls, transparency, and potential conflicts of interest.
  • In traditional finance, separate entities handle these functions, preventing conflicts and promoting integrity.

Transparency and Governance:

    • MCIs lack transparency about their corporate structure and are privately held.
    • Poorly separated business lines and limited disclosure raise concerns about their vulnerabilities and governance.
  • Risk Management:
    • The report notes that poor risk management may facilitate insider misconduct and inflate prices of self-issued crypto assets.
    • Lack of transparency hides risks until negative shocks materialize.
  • Concentration Risk:
    • Market dominance by one or more MCIs may distort crypto-asset prices and facilitate anti-competitive behaviour.
    • Concentration risk raises barriers, increases costs for users, and amplifies vulnerabilities.
  • Spill over to the Financial System:
    • The threat to global financial stability from MCI failure is presently limited but recent events highlight vulnerabilities.
    • The failure of crypto-friendly banks post-FTX collapse led to significant losses and shook confidence in crypto markets.


The FSB report underscores the need for improved regulation and transparency in the crypto space, emphasizing the potential risks associated with MCIs. It points to the challenges in assessing their revenue, managing concentration risks, and the spillover effects on the broader financial system.

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