financial stability Archives - Coin Engineer

Fed Tackles Inflation, Tariffs at May 2025 FOMC

Yeliz Akmaca — Thu, 29 May 2025 09:00:41 +0000

The Fed kept interest rates steady at the 4.25%-4.5% range at its May 6–7, 2025 meeting.
It emphasized that tariffs could increase inflation and trigger economic uncertainty.
Economic growth remains solid, and the labor market is balanced, but downside risks have increased.
U.S.-China tariffs were suspended, and bond yields continued to rise.

Federal Reserve Discusses Inflation and Tariff Risks

The U.S. Federal Reserve (Fed) made significant decisions during its Federal Open Market Committee (FOMC) meeting on May 6-7, 2025. Officials highlighted that tariffs could increase inflation, creating a challenging dilemma for interest rate policy. The minutes emphasized a cautious approach amid rising economic uncertainties. The Fed kept the federal funds rate steady at 4.25%-4.5%. Officials noted that economic growth remains solid, but risks of labor market weakening have increased. While consumers continue spending, concerns about persistent inflation have grown. Additionally, policy uncertainties are complicating the goals of full employment and low inflation.

The Fed expressed concerns about variability in trade policies. Tariffs between the U.S. and China eased after the meeting, with both sides suspending heavy taxes for a 90-day negotiation period. This supported a recovery on Wall Street. However, bond yields continued to rise. Powell defended the Fed’s independence against Trump’s pressure for rate cuts. The meeting also reviewed the Fed’s five-year policy framework. Officials evaluated the “flexible average inflation targeting” strategy, noting it could be ineffective during major inflationary shocks. No plans to change the inflation target were announced.

Trade Policies and Financial Stability Risks

The Fed discussed the volatile policies of the Trump administration. While tariffs were suspended, they were not fully lifted. Officials noted that bond market volatility could threaten financial stability. Rising Treasury yields may have long-term economic impacts. The risk of both inflation and unemployment rising was emphasized, potentially forcing the Fed into a tough choice between tight monetary policy and supporting growth. Additionally, the Fed renewed dollar and currency swap lines to support global financial stability, aiming to address liquidity needs.

Post-meeting, Trump delayed 145% tariffs on China, impacting bond yields and recession expectations. Consequently, markets do not expect a rate cut until the September meeting. The Fed is awaiting greater clarity due to policy uncertainties. Officials acknowledged the increasingly complex economic outlook. Inflation nearing the 2% target is making the Fed’s decisions more challenging. Financial market volatility is heightening recession risks. The Fed aims to both control inflation and support growth.

You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.

The post Fed Tackles Inflation, Tariffs at May 2025 FOMC appeared first on Coin Engineer.

US Wants Bitcoin Instead of Gold! New Survey Surprises

Yeliz Akmaca — Tue, 20 May 2025 16:00:35 +0000

A new nationwide survey in the US has revealed public interest in digital assets. According to research conducted by the Nakamoto Project, most Americans support converting a portion of the country’s gold reserves into Bitcoin.

The survey found that 60% of participants believe this conversion would strengthen economic stability. Participants think Bitcoin’s decentralized structure would reduce government control. This approach indicates declining trust in traditional monetary policies.

Young people, in particular, are more enthusiastic about this idea. Among those aged 18-35, 75% agree that digital assets like Bitcoin will form the backbone of the financial system in the future. This age group views adding Bitcoin to state reserves as a confidence-building move. Nakamoto Project officials noted that the survey results are striking. According to them, Bitcoin is no longer just an investment tool. It is also being considered as a strategic reserve alternative.

US: Gold or Bitcoin? The Public Makes Its Choice

Some economic experts approach this idea cautiously. They emphasize the risks due to Bitcoin’s price volatility. However, other experts argue that digital assets gain value over time.

The USA administration has not yet made a statement on this matter. The White House and the Treasury Department remain silent. Still, this public trend could prompt politicians to act. Another interesting finding from the survey is that 40% of participants also support the Federal Reserve issuing a digital dollar (CBDC). This shows that the public is open not only to Bitcoin but to digital currencies in general.

Troy Cross, one of the founders of the Nakamoto Project, stated that while some people have doubts about the survey results, they are confident in their accuracy. Cross noted that only a small portion of participants suggested having 0% Bitcoin in the portfolio. The majority preferred diversification, with younger participants leaning more toward Bitcoin compared to older ones.

“When we gave participants a slider and asked what the right balance between gold and Bitcoin should be for the America government, almost no one set the slider to 0% Bitcoin and 100% gold. Instead, most people found around 10% Bitcoin appropriate,” he explained.

The post US Wants Bitcoin Instead of Gold! New Survey Surprises appeared first on Coin Engineer.

FCA Plans to Ban Crypto Investments with Credit Cards

Yeliz Akmaca — Sat, 03 May 2025 11:00:04 +0000

The United Kingdom is taking action to prevent the high risks associated with debt-funded investments. As the crypto market draws attention with value surges accelerated by Trump’s election, this decision aims to protect investors. Foreign sources emphasize that the FCA is taking this step to strengthen financial stability.

“We are concerned that consumers purchasing crypto assets through credit could fall into unsustainable debt, especially if the value of crypto assets drops and they rely on that value for repayment.”

FCA Ban Strategy and Reasons

The FCA states that crypto purchases with credit could lead consumers into unsustainable debt. Sudden fluctuations in the value of crypto assets can expose investors to significant losses. Authorities continuously warn consumers that crypto investments are high-risk and carry the potential for total loss.

“We are considering several restrictions, including limiting the use of credit cards to directly purchase crypto assets and using credit limits provided by an e-money firm,” it says.

This supports the goal of curbing risky investments.

The FCA noted that 14% of crypto investors used credit to purchase crypto last year, up from 6% in 2022. However, the FCA indicated it is considering exempting certain stablecoins from the proposed restrictions. This imposes transparency, consumer protection, and operational resilience standards on crypto firms, similar to those in traditional financial sectors. The Financial Conduct Authority aims to regulate the market with these rules. Reuters reports that the UK aims to collaborate with the U.S. on crypto regulations.
Hannah Meakin from the law firm Norton Rose Fulbright stated that the FCA is trying to balance innovation with appropriate oversight, saying.

“However, this is no easy task, and it remains to be seen whether they can strike the right balance.”

The post FCA Plans to Ban Crypto Investments with Credit Cards appeared first on Coin Engineer.

BIS: Crypto and DeFi Could Widen Inequality, Destabilize Finance

Yigit Taha OZTURK — Sun, 20 Apr 2025 15:00:44 +0000

The Bank for International Settlements (BIS) has warned that the rapid expansion of cryptocurrencies and decentralized finance (DeFi) may increase financial instability and deepen the wealth gap.

A System Reaching Critical Mass

In its April 15, 2025 report, BIS noted that crypto and DeFi have reached “critical mass” in terms of capital and users, posing growing regulatory and economic concerns.

Stablecoins, in particular, have become essential to crypto value transfers. However, the report argues they need stricter rules to guarantee dollar redemptions during market stress.

Urging Stronger Regulation

BIS supports efforts like the STABLE Act passed in the U.S. House Financial Services Committee, which aims to enhance transparency and consumer protection in the stablecoin sector.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

The GENIUS Act, also mentioned, seeks to enforce collateral requirements and Anti-Money Laundering compliance among stablecoin issuers.

Rich Get Richer?

Citing events like the 2022 FTX collapse, BIS warned that crypto often functions as a wealth transfer mechanism from small investors to large holders (“whales”).

“Retail users were buying while whales were selling — this is not financial inclusion, it’s reverse redistribution,” the report said.

Though similar in economic function to TradFi, DeFi’s unique traits — like smart contracts and modular design — require proactive, specialized regulation to avoid systemic risks.

The post BIS: Crypto and DeFi Could Widen Inequality, Destabilize Finance appeared first on Coin Engineer.

Crypto is Not Communism: CoinFund Slams BIS Report

Yigit Taha OZTURK — Sun, 20 Apr 2025 10:00:26 +0000

Christopher Perkins, president of CoinFund, has issued a scathing rebuke of the Bank for International Settlements (BIS) following its recent report recommending isolation of the crypto industry from traditional finance.

BIS Report ‘Dangerous’ and Misinformed

Referring to the April 15 BIS paper on crypto and DeFi, Perkins claimed the report reflects fear, arrogance, or ignorance — and poses a threat to global financial stability.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

“Crypto is not communism. It’s the new internet. You cannot control it any more than you can control the web.”

Real-Time Crypto vs 9-to-5 Banking

Perkins warns that BIS’ “containment” approach could backfire, leading to systemic liquidity risks as crypto operates 24/7 while traditional markets shut down after hours.

“These recommendations will create the very risk they seek to prevent.”

Anonymity Isn’t Unique to Crypto

Responding to BIS’ concerns about anonymous DeFi developers, Perkins points out the double standard:

“When was the last time a TradFi firm published its developer list?”

He also rebuts BIS’ alarm over stablecoins and their role in developing economies:

“If USD stablecoins help people in Venezuela or Zimbabwe, isn’t that a net positive?”

The post Crypto is Not Communism: CoinFund Slams BIS Report appeared first on Coin Engineer.

EU Regulator Warns Crypto Could Threaten Market Stability!

Yigit Taha OZTURK — Wed, 09 Apr 2025 10:00:41 +0000

The EU markets watchdog ESMA warned that as the crypto industry grows and becomes more interconnected with traditional finance, it could pose significant risks to financial stability. Speaking on April 8, ESMA’s Executive Director Natasha Cazenave told the Economic and Monetary Affairs Committee: “Future sharp drops in crypto prices could have spillover effects on our financial system.”

Cazenave emphasized that crypto currently represents only 1% of global financial assets and is not yet a major threat. However, she pointed to rapidly increasing connections, especially in the more crypto-friendly US.

Concerns include spot crypto ETFs, stablecoin usage, hacks, scams, and high-profile collapses like the $1.4B Bybit exploit and FTX’s 2022 downfall.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

To counter such risks, the EU has already rolled out the MiCA (Markets in Crypto-Assets) regulation. While Cazenave called MiCA a breakthrough, she stressed that “there is no such thing as a safe crypto-asset,” and additional regulations may be needed.

Europe Still Hesitant on Crypto

According to Cazenave, over 95% of European banks remain uninvolved in crypto-related activities. However, retail interest is increasing, with an estimated 10% to 20% of investors in Europe having some crypto exposure—reflecting broader global trends.

These warnings come amid recent double-digit drops in both crypto and stock markets, as macroeconomic uncertainties persist.

The post EU Regulator Warns Crypto Could Threaten Market Stability! appeared first on Coin Engineer.

Bank of England: Asks Firms to Disclose Crypto Asset Exposure

Yigit Taha OZTURK — Fri, 13 Dec 2024 14:00:22 +0000

The Prudential Regulation Authority (PRA), the regulatory arm of the Bank of England, has requested firms to disclose their current and future crypto asset exposure by March 2024. This move is aimed at monitoring the impact of crypto assets on financial stability and contributing to the formulation of future policies.

In a statement issued on December 12, the PRA asked companies to share their “current and expected crypto asset exposures” and explain how they are applying the Basel framework to crypto regulations.

“This information will be used to ensure crypto assets are managed prudently, to analyze the costs and benefits of various policy options, and to shape our regulatory efforts,” the statement read.

What is the Basel Framework?

The Basel framework is a regulatory model that defines capital and risk management requirements for banks dealing with crypto assets. Introduced by the Basel Committee on Banking Supervision (BCBS) in December 2022, the framework categorizes crypto assets into three broad risk profiles.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

The PRA is also requesting firms to assess their crypto asset plans up to September 30, 2029. This information will form the foundation for monitoring the effects of crypto assets on financial stability and improving risk management.

The questionnaire includes various issues, such as how firms hold crypto assets and the use of permissionless blockchains. The PRA points out that these blockchains carry “fully unmanaged risks,” citing concerns like lack of payment certainty, transaction error risks, and the absence of a clear link between the owner and control mechanism of a digital asset.

However, it’s noted that the classification of permissionless blockchains continues to be reviewed.

Related Developments

The number of firms involved with crypto assets is growing globally. For example, Boyaa Interactive International, based in Hong Kong, recently announced it converted nearly $50 million worth of Ethereum into Bitcoin. Additionally, the Japanese investment company Metaplanet revealed plans to create a fund to purchase $62 million worth of Bitcoin, adding to its existing holdings of 1,142 Bitcoin.

The post Bank of England: Asks Firms to Disclose Crypto Asset Exposure appeared first on Coin Engineer.