Top US Financial Panel Wants Monitoring of Digital Assets

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.

Members of the council include Treasury Secretary Steven Mnuchin, Federal Reserve Chair Jerome Powell, US Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term 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 Stablecoin Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Read this Term 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.