US Financial Stability Oversight Council (FSOC) published its annual report for 2024. In the report, the Council pointed out the risks that pose a threat to the USA and the global financial system, and warned that these threats may increase if stablecoins continue to grow uncontrolled. However, the report did not propose any concrete steps to deal with these problems.
Risks of Stablecoins on the Financial System Increase
FSOCnoted that stablecoins are currently not subject to any federal regulatory framework. The report emphasized that the market size and lack of transparency of stablecoins are a potential threat to the US financial system. “Stablecoinsis very susceptible to liquidity problems without appropriate risk management standards. “This situation is further exacerbated by market concentration and lack of transparency.”
Council, TetherHe cited the fact that ‘s stablecoin USDT constitutes 70 percent of the global stablecoin market. It was stated that this large market share should be carefully monitored for financial stability. In addition, it was stated that some stablecoins are subject to state-level controls, but these regulations are insufficient.
“Some stablecoins must comply with regular reporting requirements. However, many provide limited verifiable information about reserve management practices,” it said. That’s why the FSOC reiterated its call for comprehensive federal regulation of stablecoin issuers.
Clear Need for Regulation for the Cryptocurrency Market
FSOC stated that the US financial system also faces risks arising from the cryptocurrency market. The report stated that many cryptocurrency companies and issuers do not comply with US financial regulations. It was noted that this situation increases the risks of fraud and manipulation. “The Council recommends that Congress enact legislation that provides federal regulators with clear authority for spot markets of non-securitized cryptocurrencies,” it said.
US Treasury Secretary Janet Yellen He pointed out that artificial intelligence and cryptocurrencies bring new risks to the financial system. “While these innovations provide efficiency, they also create financial and cyber risks and dangers from third-party service providers,” he said. He emphasized that the FSOC is calling for both federal regulation of stablecoin issuers and a comprehensive legal framework for cryptocurrencies.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
