A panel of top United States financial regulators has urged federal and state officials to monitor the risks associated with digital assets.
The recommendation was made in an annual report published on Wednesday by the Financial Stability Oversight Council. The council is one of the top financial panels in the country and was set up in 2008 to assess any emerging risks that could trigger a banking crisis.
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Members of the council include Treasury Secretary Steven Mnuchin, Federal Reserve Chair Jerome Powell, US Securities and Exchange Commission Chair Jay Clayton, and Commodity Futures Trading Commission Chair Heath Tarbert.
“The council recommends that federal and state regulators continue to examine risks to the financial system posed by new and emerging uses of digital assets and distributed ledger technologies,” the report stated.
Stablecoins – the real threat to the economy
The panel is concerned about the popularity of stablecoins and warned of their impact on the mainstream economy.
“Most recently, so-called stablecoins—digital assets designed to maintain a stable value relative to another asset (typically a unit of currency or commodity) or a basket of assets— have experienced growth in market capitalization and received increased public attention,” the annual report noted.
“If a stablecoin became widely adopted as a means of payment or store of value, disruptions to the stablecoin system could affect the wider economy.”
By stablecoins, the panel is mostly indicating Facebook’s attempt to launch Libra, a multi-commodity pegged digital currency. The project is facing massive roadblocks in the country as the government is cautious about allowing a private entity to run a currency ecosystem.
“The Council encourages coordination among U.S. financial regulators to address potential issues that arise from financial innovation and will continue to use the Council’s digital assets and distributed ledger technology working group to promote consistent regulatory approaches and to identify and address potential risks,” the report added.