Treasury's economic stability protection is alerting that cryptocurrencies could jeopardize the safety of the U.S. economy

Treasurys economic stability protection is alerting that cryptocurrencies could jeopardize the safety of the US economy

October 5, 2022: -On Monday, the Treasury Department warned that unregulated cryptocurrencies could risk the U.S. financial system.

The warning was a part of the first major public report released by the Treasury’s Financial Stability Oversight Council on digital assets. The council identified digital or “cryptos” assets such as stablecoins and lending and borrowing on the industry’s trading platforms as an “important emerging vulnerability.”

“The report concludes that crypto-asset activities could pose risks to the stability of the U.S. financial system and emphasizes the importance of appropriate regulation, including enforcement of existing laws,” Treasury Secretary Janet Yellen said. “It is vital that government stakeholders collectively work to make progress on these recommendations.”

The council first designated digital assets a priority area in February.

Global crypto-asset market capitalization reached a peak of roughly $3 trillion last November, comprising approximately 1% of global financial assets, according to the report. Though the impact is relatively small in the more extensive global financial system, digital financing is quickly gaining popularity. According to the report, it is being manipulated by criminals for illegal gain.

Earlier this year, the Treasury Department issued a series of sanctions against Russian oligarchs, certain Russian banks, and other organizations for using crypto assets to evade sanctions. In September, the agency blocked all property in possession or control of U.S. persons for 22 individuals and two entities that helped digitally finance Russia’s invasion of Ukraine.

Stablecoins, a type of cryptocurrency popular on the foreign exchange market, are also overwhelmingly used in speculative crypto-asset trading, Rohit Chopra, director of the Consumer Financial Protection Bureau, said in the FSOC meeting. Created for price stability, the price of the stablecoin is linked to fiat currencies, commodities, or other crypto assets.

The group recommended legislation that empowers financial regulators to oversee the industry more vigorously and expands bank exams requiring federal and state agencies to look at services provided by crypto asset service companies.

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Treasury's economic stability protection is alerting that cryptocurrencies could jeopardize the safety of the U.S. economy
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Treasury's economic stability protection is alerting that cryptocurrencies could jeopardize the safety of the U.S. economy
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The Treasury Department warned that unregulated cryptocurrencies could risk the U.S. financial system.
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