Crypto no longer in top 10 most cited potential risks: US central bank report

While proponents of traditional finance are still keen to dismiss Bitcoin (BTC) and the crypto ecosystem as financial risks, a survey conducted by the Federal Reserve Bank of New York – one of the 12 federal reserve banks in the United States – revealed 11 factors that overshadow crypto when it comes to risk in 2022.

Geopolitical tensions, foreign sales, COVID-19 and high energy prices were found to be some of the most cited potential risks to the US economy, according to a central bank survey published by the Federal Reserve System.

Of the 14 factors that constitute a financial risk, crypto ranks 11th – revealing a change in investor mindset due to the continued efforts of crypto entrepreneurs to educate the masses.

Some of the pressing risk concerns raised by respondents were related to the power struggle in global economies, which include US-China tensions, the Russia-Ukraine war, higher energy prices, rising inflation, the COVID-19 pandemic and cyber attacks, to name a few.

However, the US central bank maintains its anti-crypto position when it comes to evaluating the risk in crypto investments. It pointed out in the report that selected cryptocurrencies – including BTC, Ether (ETH), Binance Coin (BNB), Cardano (ADA) and XRP – are down around 69 percent in value compared to their peak in November 2021, adding that:

“Speculation and risk appetite appear to be the primary drivers of crypto-asset prices, which have seen large fluctuations in recent years.”

The central bank also cited the collapse of the Terra (LUNA) ecosystem, highlighting that entities that had direct exposure to the internal stable TerraUSD (UST) found themselves in financial distress, sometimes leading to bankruptcy.”

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On the other side of the world, India launched its homegrown digital banking currency (CBDC) for the wholesale segment.

While the country remains against the idea of ​​cryptocurrency mainstreaming, the pilot project saw the involvement of nine local traditional banks, which include State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC.

Related reports suggested that India’s central bank – the Reserve Bank of India (RBI) – plans to launch the digital rupee for the retail segment within a month in select locations.