charges allege that binance ’ s ceo and binance entities were involved in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law. [ 26 ] should these allegations be proven, this would be yet another example of the fundamental shortcomings of the crypto ecosystem. the recent crypto failures also show that risk, in itself, is technology - neutral. in financial services, it does not matter if a business ledger is kept on paper as it was for hundreds of years, in a centralised system as we have now or on a blockchain as in the crypto asset ecosystem. in the end, whether a firm remains in business or fails depends on how it manages credit risk, market risk, liquidity risk and leverage. crypto enthusiasts would do well to remember that new technology does not make financial risk disappear. the financial risk either remains or transforms into a different type. it is like pressing a balloon on one side : it will change in shape until it pops on the other side. and if the balloon is full of hot air, it may rise for a while but will burst in the end. links with the traditional financial sector the second contradiction arises from the crypto industry ’ s attempt to strengthen ties with actors in the financial system, including banks, big tech companies and the public sector. major payment networks [ 27 ] and intermediaries [ 28 ] have enhanced their support services for crypto - assets. numerous prominent tech companies, including meta ( formerly facebook ) and twitter, have explored ways to incorporate crypto into their platforms. [ 29 ] by leveraging their large customer base and offering a mix of payments and other financial services, tech firms, especially big techs, could solidify the ties between crypto - assets and the financial system. the recent failures of silvergate bank and signature bank have highlighted the risks for banks associated with raising deposits from the crypto sector. the stability of these deposits is questionable given cryptos ’ volatility. the discontinuation of the silvergate exchange network and signet, which functioned as a quasi - payment system for the crypto investments of silvergate bank and signature bank clients, also shows how crypto - assets service providers depend on the traditional financial sector for settlement in fiat money. the crypto industry not only seeks to strengthen its ties with the traditional financial industry. it also seeks to gain access to the public safety net that strongly regulated financial entities benefit from

mechanisms, unbacked cryptos are incapable of effectively responding to temporary fluctuations in demand and thus fail to stabilise their value. similarly, bitcoin ’ s limited supply – at 21 million coins – means that it does not offer protection against the risk of structural deflation. 18. di casola, p., habib, m. and tercero - lucas, d. ( 2023 ), “ global and local drivers of bitcoin trading vis - a - vis fiat currencies ”, ecb working paper series, forthcoming. 19. the industry ’ s trend towards centralisation is clear. since 2015 approximately 75 % of the actual bitcoin volume has been associated with exchanges or exchange - like entities, including online wallets, over - thecounter ( otc ) desks and large institutional traders. see makarov and schoar ( 2022 ), op. cit. 20. staking is the foundation of the proof - of - stake consensus mechanism, which entails individuals locking up their assets ( native coins ) on a blockchain to secure the protocol. the stake acts as a form of collateral to ensure that validators, who are responsible for verifying and appending the blockchain, act in a manner that is in line with the protocol's rules. see oderbolz, n., marosvolgyi, b. and hafner, m. ( 2023 ), “ the economics of crypto staking ”,. swiss economics blog, 1 march. 21. they back their value with securities, commodities, as well as fiat money. interestingly and inevitably, major stablecoin issuers – such as tether or circle – adopt centralised organisational structures, directly contradicting the initial ideas as laid down in satoshi nakamoto ’ s white paper. the notion that stablecoin issuers might invest in crypto - assets could further concentrate holdings and contradict the low - risk requirements for stablecoin reserves. 22. graf von luckner, c., reinhart, c. m. and rogoff, k. ( 2023 ), “ decrypting new age international capital flows ”, journal of monetary economics, 1 june. 23. although it represents only a small part of the crypto - asset market, the stablecoin tether accounts for close to half of all trading on crypto -