The Financial Stability Oversight Council (FSOC), chaired by U.S. Treasury Secretary Janet Yellen, will meet on September 23 to discuss regulatory loopholes in digital currencies and the potential risks they pose.
Previously, the annual report released by the U.S. Treasury Department’s Financial Stability Oversight Committee (FSOC) mentioned digital assets as one of the emerging innovations in the U.S. financial ecosystem and a potential threat to its stability.
The FSOC’s mission is to identify “new threats to the stability of the U.S. financial system,” noting that financial innovation in cryptocurrencies such as bitcoin and stablecoins “could provide consumer and consumer benefits by addressing unmet or emerging needs or reducing costs. Businesses bring great benefits”, but they also create risks and uncertainties.
Warren also highlighted key risks posed by cryptocurrencies, including a lack of transparency from hedge funds, threats from stablecoins, and the use of digital currencies in cyberattacks.
FSOC calls for “continued coordination between federal and state financial regulators to support responsible financial innovation and competitiveness, promote a consistent regulatory approach, and identify and address potential risks arising from such innovation.”
Last fall, the U.S. Financial Markets Working Group recommended that the FSOC should be given the power to regulate stablecoins if Congress fails to pass stablecoin regulation legislation.
Digital currencies are becoming the first asset to be looked at by U.S. regulators, especially those charged with overseeing them. With more attention, perhaps the crypto ecosystem will get more embrace from U.S. regulators, a desire of many industry giants.
U.S. President Joe Biden established a new framework on September 17 on how cryptocurrencies are traded and regulated in the U.S. – focusing on improving cryptocurrencies to perform seamless transactions and reduce what can happen with digital assets for investors and the crypto space in general crime.
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