Fed research papers warn about future risks from crypto CeFi and DeFi

The US Federal Reserve’s research arm published a pair of papers last week exploring decentralized finance and the ramifications of digital assets for financial stability. The Fed and its leadership have pushed for more oversight of the crypto industry, particularly in the context of its links to the broader financial sector. The stability paper concluded that the crypto ecosystem is “prone to the buildup of financial vulnerabilities,” but later added that “financial stability risks are not extensive because the digital asset ecosystem does not provide significant financial services and its interconnections with the traditional financial system are limited.”.