The Treasury Department warned Monday that unregulated cryptocurrencies could pose risks to the U.S. financial system.
The warning was part of the first major public report released on digital assets by the Treasury Department’s Financial Stability Oversight Committee. The council identified digital or “crypto” assets such as stablecoins and lending and borrowing on industry trading platforms as “significant new vulnerabilities.”
Treasury Secretary Janet Yellen said, “The report concludes that cryptocurrency activity may pose a risk to the stability of the U.S. financial system and calls for appropriate regulation, including enforcement of existing laws. “It is imperative that government stakeholders work together to advance these recommendations.”
The council first designated digital assets as a priority area in February.
US Treasury Secretary Janet Yellen speaking at the Atlantic Festival on September 22, 2022 in Washington, DC.
Kevin Deitch | Getty Images
According to the report, the global cryptocurrency market capitalization peaked at around $3 trillion last November, accounting for around 1% of global financial assets. Digital finance has become ubiquitous and manipulated by criminals for illicit gain, according to the report, although its impact on the larger global financial system is relatively small.
Earlier this year, the Ministry of Finance series of sanctions Against Russian oligarchs, certain Russian banks, and other organizations that use cryptocurrencies to evade sanctions. In September, authorities blocked all property owned or controlled by Americans for 22 of her individuals and two of her entities that helped digitally finance Russia’s invasion of Ukraine.
stablecoinIt is a type of cryptocurrency that is popular in the forex market.. Created for price stability, stablecoin prices are linked to flat currencies, commodities, or other crypto assets.
The group proposes legislation to empower financial regulators to more actively oversee the industry, expand bank examinations, and encourage federal and state agencies to consider services provided by crypto service firms. requested.
Established after the 2008-2009 financial crisis, the FSOC identifies emerging threats to the nation’s financial security and organizes a coordinated response across U.S. financial regulators. Under the Dodd-Frank Act, the FSOC is empowered to supervise and regulate nonbank financial companies, financial markets utilities, payment, clearing or settlement activities to address potential vulnerabilities to financial stability. I’m here.
To date, the report states that the FSOC has not used this power to regulate the cryptocurrency market.