FRM Part II · FRM Exam Part II · Regulating the Crypto Ecosystem: The Case of Unbacked Crypto Assets
A supervisor decides to contain crypto risks. Which measure is most consistent with a containment strategy rather than a full regulatory regime?
Prudential limits on bank exposures and restrictions on links to crypto firms are containment. They reduce contagion into the regulated system without legitimising crypto through licensing, safety nets or liquidity recognition.
- AGranting crypto exchanges full banking licences with deposit insurance
- BSetting prudential limits on banks' exposures to unbacked crypto assets and restricting their funding links to crypto firmsCorrect
- CAllowing crypto assets to be counted as high-quality liquid assets
- DIntroducing a tax exemption for crypto gains
Explanation
Containment limits transmission between crypto and the regulated financial sector, for example through exposure limits and restrictions on interconnections. Licensing with deposit insurance integrates crypto, HQLA treatment would raise linkages, and a tax exemption encourages adoption.
Did you get it right without looking?
One question tells you little. A timed set on Regulating the Crypto Ecosystem: The Case of Unbacked Crypto Assets shows your real accuracy, how long you take and where you lose marks.
More Regulating the Crypto Ecosystem: The Case of Unbacked Crypto Assets questions
- Which statement best describes a challenge for coordinated regulation of unbacked crypto assets highlighted by the lack of an issuer or unde…
- A policy team compares three options for unbacked crypto: Ban, Contain, Regulate. They observe that a jurisdiction's strategy, if it adopts …
- A risk analyst at a regulator is classifying digital assets. Which characteristic best distinguishes an unbacked crypto asset (such as Bitco…
- The IMF reading on regulating unbacked crypto assets emphasises a principle that similar activities and risks should face similar rules rega…
- Which of the following is a reason why unbacked crypto assets can pose risks to consumers and investors that markets alone are unlikely to c…
- A global standard-setter is asked to evaluate which of four approaches would most effectively reduce both regulatory arbitrage and uneven su…