FRM Part II · FRM Exam Part II · Regulating the Crypto Ecosystem: The Case of Unbacked Crypto Assets
Which statement best describes a challenge for coordinated regulation of unbacked crypto assets highlighted by the lack of an issuer or underlying claim?
Because unbacked crypto assets have no issuer or underlying claim, there is no one to hold accountable for redemption or reserves. Oversight therefore has to target intermediaries, service providers and the on-off ramps linking crypto to the traditional financial system, and coordination is needed to cover them across borders.
- ANo central issuer exists to hold accountable, so oversight must focus on intermediaries, service providers and on-off rampsCorrect
- BRegulators can require the issuer to guarantee redemption at par
- CReserve requirements can be imposed on the issuer to back the asset
- DStandard issuer disclosure rules apply directly to the asset
Explanation
Unbacked crypto assets have no identifiable issuer or reserve, so issuer-based tools do not work. Regulators therefore target intermediaries, platforms, and the points where crypto connects to the traditional financial system.
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
- A bank supervisor assesses a bank's exposure to unbacked crypto assets under the Basel Committee's prudential treatment, which places such a…
- A supervisor reviews a global bank that has no direct crypto holdings but provides credit lines to several crypto-lending firms and custody …
- A regulator is weighing an outright ban on unbacked crypto assets. Which is the most important practical weakness of a ban highlighted in th…
- A pension fund's risk committee is told that a crypto lender's collateral consists mainly of its own exchange token. During a market sell-of…
- Which statement best captures why unbacked crypto assets are described as difficult to regulate with a purely national approach?
- A regulator weighs an outright ban on unbacked crypto assets. Which is the most significant practical drawback of a ban, as emphasised in th…