In this case, the potential validators disclose their identity to the entire ecosystem, and they are entrusted this role according to their reputation rather than their economic interest. Not only is this mechanism more efficient and more agile, but it is  7  See, for example, the case of JP Coin. 8  https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/. 3  particularly useful in situations with a low number of participants and where potential validators already enjoy trust. The environment in which crypto-assets operate is also characterised by the presence of a wide range of players9 whose services are essential to provide structure and contribute to the proper functioning of the system. Thus, in addition to crypto-asset issuers, there are platforms that help dematerialise pre-existing assets, infrastructures that facilitate the trading and exchange of crypto-assets, institutions that receive, transfer and/or execute third-party orders, as well as market-makers, code developers, providers of custody, wallet and consultancy services and a long list of others. It is, therefore, a highly complex universe, and this complexity is heightened by the fact that these players are based on a broad range of jurisdictions. In this regard, we should also bear in mind the world of decentralised finance (DeFi), which aims to replicate the dynamics of the provision of financial products and services, but in a decentralised and fully automated environment, thus removing the need for intermediaries. The growing importance of crypto-assets With such a wealth of initiatives, the significant developments experienced by cryptoasset markets in recent times may come as no surprise.

Beyond their likely contribution to, e.g., making payments more efficient or to driving innovation in financial markets, crypto-assets pose a number of important risks for the financial stability which could, eventually, become a material source of concern for relevant authorities if not accompanied by effective mitigation measures, as emphasised in the G20 communiqué of 18 February.2 I will begin my speech by describing the defining characteristics of the phenomenon and recent developments, before turning to the specific risks to financial stability that they may pose. I will end by highlighting some of the main elements shaping the current response of regulators and supervisors and the challenges that lie ahead. The complex universe of crypto-assets The term crypto-asset is oftentimes used to refer to a wide range of highly heterogeneous assets whose common trait is that they are a digital representation of value or a set of contractual rights. In contrast with other digital assets already in circulation, they rely on distributed ledger technology (DLT) to be transferred, traded and stored. In addition, unlike central bank digital currencies (CBDCs), they are not backed by a central bank or any other public authority. To simplify somewhat, they can be said to share certain standard technical features, such as (i) a decentralised ledger, (ii) the use of encryption techniques to secure communications over open networks, and (iii) the deployment of protocols that allow to automatically execute different types of transactions.