<\/p>\n
Financial systems have typically evolved through a combination of innovation and crisis. It tends to go like this: New technologies promise efficiency, only for their risks to become apparent under stress. Over time, institutions, regulations and practices adapt.<\/p>\n
Now, a growing body of research by global economists suggests digital assets and their underlying blockchain infrastructure may be entering that same cycle. And the findings are aligned around the risks that could come from integrating on-chain assets into the traditional financial system.<\/p>\n
An April report<\/a> from the International Monetary Fund (IMF), for example, argued that moving financial services and payments on-chain is not an incremental digitization but a \u201cstructural shift in financial architecture,\u201d one that could inadvertently remove the frictions that currently prevent financial crises from spiraling.<\/p>\n The research does not reject financial blockchain technology\u2019s potential. Instead, it underscores the importance of understanding its implications at a systemic level. In calm markets, crypto\u2019s frictionless design can promise efficiency. In stressed markets, it may amplify instability.<\/p>\n And the IMF report is far from alone in its conclusions around the potential impact that bringing blockchains and digital assets into the traditional financial perimeter might have.<\/p>\n Across recent findings published by the U.S. Federal Reserve, the Financial Action Task Force<\/a> (FATF), the European Central Bank (ECB), and other global institutions, researchers are showing themselves to be keen on highlighting crypto\u2019s potentially systemic risks before any major and irreversible stresses end up proving their point.<\/p>\n Advertisement: Scroll to Continue<\/p>\n<\/div>\n See also:<\/strong>\u00a0Stablecoins\u2019 Shadow FX Market Is Becoming a Corporate Treasury Issue\u00a0<\/a><\/p>\n To understand the concern around crypto, it helps to start with what blockchain-based systems do exceptionally well: they compress time<\/a>. Settlement that once took days happens in minutes or seconds as intermediaries that once layered verification and delay are replaced by automated protocols. As a result, liquidity can move globally, continuously, and with minimal human intervention.<\/p>\n A 2026 paper published by economists at the\u00a0Federal Reserve Bank of New York<\/a> titled \u201cStablecoin Disintermediation<\/a>\u201d studied how movement in stablecoin primary market activities is becoming associated with the intraday volatility of partner banks\u2019 reserve balances, ultimately finding<\/a> that stablecoins can\u00a0transmit liquidity shocks to partner banks.<\/p>\n A separate report<\/a> from the New York Fed, \u201cStablecoins vs. Tokenized Deposits: The Narrow Banking Debate Revisited<\/a>,\u201d\u00a0found that, in contrast to stablecoins, tokenized bank-issued deposits can fund loans and investments, tying\u00a0money creation<\/a>\u00a0to credit expansion.<\/p>\n We\u2019d love to be your preferred source for news<\/a>.<\/p>\n Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n That analysis reframed stablecoins and tokenized deposits not as competing payment tools but as instruments with fundamentally different balance sheet consequences. The choice between them affects liquidity strategy, counterparty exposure, and ultimately the cost and availability of credit across the economy.<\/p>\n The\u00a0European Central Bank<\/a>\u00a0(ECB) has called for close oversight<\/a> of stablecoins in its region, and the\u00a0Reserve Bank of India<\/a>\u00a0Governor Sanjay Malhotra said in a speech last year that his organization \u2014 India\u2019s central bank and banking regulator \u2014\u00a0 was \u201cadopting a\u00a0very cautious<\/a>\u00a0approach\u201d toward cryptocurrencies, stablecoins included.<\/p>\n Elsewhere, the Financial Stability Board (FSB) in 2025 also announced plans to increase its focus on stablecoins, saying that they could\u00a0pose risks<\/a>\u00a0in the global financial system.<\/p>\n Still, since the start of 2026, more systemically relevant global banks, like\u00a0Morgan Stanley<\/a>, have already entered the\u00a0digital asset<\/a>\u00a0space.<\/p>\n See also:<\/strong> Stablecoin Pilots Keep Stalling on the Road to Scale<\/a>\u00a0<\/strong><\/p>\n In traditional finance, settlement frictions due to delays, intermediaries, jurisdictional barriers and more, have often been framed as inefficiencies. But they also serve as circuit breakers. Payment lags give institutions time to assess exposures, clearinghouses absorb shocks and mutualize risk, all while regulatory boundaries help slow the transmission of stress across borders.<\/p>\n On-chain systems, by contrast, are designed to eliminate these features. Economists are now asking whether that coupling, while efficient, reduces the system\u2019s ability to absorb shocks.<\/p>\n A March report<\/a> from the FATF titled \u201cTargeted Report on Stablecoins and Unhosted Wallets,<\/a>\u201d for example, highlighted the growing tension between the technology\u2019s promise of frictionless global payments and the risks posed by an ecosystem that remains only partially regulated.<\/p>\n The\u00a0PYMNTS Intelligence<\/a>\u00a0and Citi report \u201cChain Reaction: Regulatory Clarity as the Catalyst for Blockchain Adoption<\/a>\u201d found that blockchain\u2019s next leap will\u00a0be shaped\u00a0by regulation; that evolving guidance is beginning to create the foundations for safe,\u00a0scalable blockchain adoption. Still, the report found that implementation challenges continue to complicate blockchain\u2019s institutional and systemic progress.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Financial systems have typically evolved through a combination of innovation and crisis. It tends to go like this: New technologies promise efficiency, only for their risks to become apparent under stress. Over time, institutions, regulations and practices adapt. Now, a growing body of research by global economists suggests digital assets and their underlying blockchain infrastructure […]<\/p>\n","protected":false},"author":2,"featured_media":423751,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[235,203,210,234,231,232,237,238,236,233],"class_list":["post-423742","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain","tag-bitcoin","tag-crypto-currency","tag-elon-musk","tag-ethereum","tag-hyperledger","tag-ibm","tag-mining","tag-nodes","tag-spacex","tag-tesla"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/423742","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=423742"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/423742\/revisions"}],"predecessor-version":[{"id":423754,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/423742\/revisions\/423754"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/423751"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=423742"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=423742"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=423742"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Risks When Trust Moves From Institutions to Infrastructure<\/h2>\n
Scope of Risks Being Flagged<\/h2>\n