Terms like fintech, cryptoassets, stablecoins and decentralised finance (DeFi) increasingly feature in the media and the reports of various authorities and central banks. Cryptoassets have, in the space of a few years, gone from being a relatively unknown phenomenon to one that is generating growing interest among both private individuals and traditional financial entities.
However, it might be difficult to know exactly what fintech or cryptoasset means. This staff memo therefore aims to provide an overview of fintech and cryptoassets, how these phenomena have developed over time and the various risks and challenges that they pose to private individuals, the financial system, authorities and central banks alike.
We start with a review of what fintech is, how entities operating in the fintech sector are regulated and the state of the Swedish fintech market. We then explain what cryptoassets are, their market and their use. We then discuss the challenges and risks that fintech and cryptoassets can present, and the status of regulation and international standards for cryptoassets. We round off with a brief description of DeFi.
However, this staff memo should not be seen as an exhaustive account of fintech and cryptoassets. Also, these phenomena are developing rapidly and the content of this staff memo is current as of 13 May 2022. A limitation is that we do not address central bank digital currencies (CBDCs) or the phenomenon non-fungible tokens (NFTs) in this staff memo. For more information on CBDCs, see for example Payments Report, 2021, Sveriges Riksbank. For more information on what NFTs are, see for example M. Clark (2021), “NFTs, explained”, 18 August 2021, The Verge.