and not on regulatory evasion, which ultimately leaves investors more exposed than they may appreciate. due to the cross - sectoral and cross - border scope of crypto platforms, exchanges, and activities, it is important that regulators work together domestically and internationally to maintain a stable financial system and address regulatory evasion. the same - risk - same - regulatory - outcome principle guides the financial stability board ’ s work on stablecoins, crypto - assets, and defi ; the basel consultation on the prudential treatment of crypto - assets ; the work by the international organization of securities - 5commissions ’ fintech network ; the work by federal bank regulatory agencies on the appropriate treatment of crypto activities at u. s. banks ; and a host of other international and domestic work. 4 in implementing a same - risk - same - regulatory - outcome principle, we should start by ensuring basic protections are in place for consumers and investors. retail users should be protected against exploitation, undisclosed conflicts of interest, and market manipulation — risks to which they are particularly vulnerable, according to a host of research. 5 if investors lack these basic protections, these markets will be vulnerable to runs. second, since trading platforms play a critical role in crypto - asset markets, it is important to address noncompliance and any gaps that may exist. we have seen cryptotrading platforms and crypto - lending firms not only engage in activities similar to those in traditional finance without comparable regulatory compliance, but also combine see, for example, financial stability board ( 2022 ), assessment of risks to financial stability from crypto - assets ( basel, switzerland : fsb, february ), https : / / www. fsb. org / 2022 / 02 / assessment - of - risks - tofinancial - stability - from - crypto - assets ; financial stability board ( 2020 ), regulation, supervision and oversight of “ global stablecoin ” arrangements : final report and high - level recommendations ( basel, switzerland : fsb, october ), https : / / www. fsb. org / wp - content / uploads / p131020 - 3. pdf ; basel committee on banking supervision ( 2022 ), “ consultative document : second consultation on the prudential treatment of cryptoasset exposures ” ( basel, switzerland : bank for international settlements, june ), https : / / www. bis. org / bcbs / publ

improvement and customization. we are closely monitoring recent events where risks in the system have crystallized and many crypto investors have suffered losses. despite significant investor losses, the crypto financial system does not yet appear to be so large or so interconnected with the traditional financial system as to pose a systemic risk. so this is the right time to ensure that like risks are subject to like regulatory outcomes and like disclosure so as to help investors distinguish between genuine, responsible innovation and the false allure of seemingly easy returns that obscures significant risk. this is the right time to establish which crypto activities are permissible for regulated entities and under what constraints so that spillovers to the core financial system remain well contained. insights from recent turbulence several important insights have emerged from the recent turbulence in the cryptofinance ecosystem. first, volatility in financial markets has provided important information about crypto ’ s performance as an asset class. it was already clear that crypto - assets are volatile, and we continue to see wild swings in crypto - asset values. the price of bitcoin has dropped by as much as 75 percent from its all - time high over the past seven months, and it has declined almost 60 percent in the three months from april through june. most other prominent crypto - assets have experienced even steeper declines over the same period. contrary to claims that crypto - assets are a hedge to inflation or an uncorrelated asset class, crypto - assets have plummeted in value and have - 3proven to be highly correlated with riskier equities and with risk appetite more generally. 2 second, the terra crash reminds us how quickly an asset that purports to maintain a stable value relative to fiat currency can become subject to a run. the collapse of terra and the previous failures of several other unbacked algorithmic stablecoins are reminiscent of classic runs throughout history. new technology and financial engineering cannot by themselves convert risky assets into safe ones. third, crypto platforms are highly vulnerable to deleveraging, fire sales, and contagion — risks that are well known from traditional finance — as illustrated by the freeze on withdrawals at some crypto lending platforms and exchanges and the bankruptcy of a prominent crypto hedge fund. some retail investors have found their accounts frozen and suffered large losses. large crypto players that used leverage to boost returns are scrambling to monetize their holdings, missing margin calls, and facing possible insol