Trend Cryptoassets and DeFi threatening financial stability without regulation

Summary

The report expects that cryptoassets and decentralised finance could threaten the stability of the financial system. It sees the threat as greatest where the risks are poorly understood and proper regulation is not in place. The report explains that as global financial systems and products grow more complex and interconnected, bank failures and insolvencies have bigger effects that could leave an industry or the whole economy unstable for a long time. The cryptoasset market reached about 3.1 trillion dollars in May 2025, and large financial firms have begun adopting blockchain and cryptoassets. In response, the Treasury confirmed in November 2024 that it would pursue a new financial services regulatory regime for cryptoassets.