On 28 November 2023, the Financial Stability Board (FSB) published a report on the financial stability implications of multifunction crypto-asset intermediaries (MCIs).

The report defines MCIs as individual firms, or groups of affiliated firms, that combine a broad range of crypto-asset services, products and functions typically centred around the operation of a trading platform.

The crypto-asset market turmoil in 2022 has highlighted that MCIs are a critical part of the crypto-asset markets and can exacerbate structural vulnerabilities in those markets. Some MCIs are deeply interconnected with a broad range of counterparties across the crypto-asset ecosystem. A major MCI’s failure could be significant for the crypto-asset ecosystem due to its centrality and interconnectedness in the market. MCIs are also often the entry point for retail and institutional investors into the crypto-asset ecosystem and are therefore potential channels for spill-overs into the traditional financial system.

The report describes the general landscape of MCIs and focuses on key characteristics such as functions and activities conducted, ownership and corporate structure, and interconnectedness within the crypto-asset ecosystem and with the financial system. It also assesses the financial stability risks of MCIs and identifies certain policy implications for further consideration by the FSB in collaboration with other relevant standard-setting bodies. This includes considering ways to enhance cross-border cooperation and information sharing to help local authorities effectively regulate and supervise MCIs operating globally. Also, to consider whether disclosures and reporting are adequately covered by the FSB’s and other standard setting bodies’ recommendations or would warrant additional mitigating policy measures.