The Financial Stability Oversight Council (FSOC) has warned about the risks cryptocurrencies pose to the financial stability of the US economy. The government agency has called for a more structured regulatory framework and has suggested targeting spot markets and fiat-based stablecoins.
Crypto Could Unsettle the Financial Landscape
The FSOC detailed in a press release the current issues digital assets were introducing into the financial landscape. According to its Report on Digital Asset Financial Stability Risks and Regulation, blockchain-based assets could unsettle the US financial ecosystem if their growing interconnected affiliation with traditional financial systems is not properly supervised.
The #FSOC released their report on “Ensuring Responsible Development of Digital Assets” as per executive order.
Their report outlines risks and gaps posed by digital assets and provides suggestions to alleviate potential pitfalls.https://t.co/LQuH3XThLi
— CertiK Alert (@CertiKAlert) October 4, 2022
The FSOC undertook the task in response to Section 6 of President Joe Biden’s Executive Order 14067, which highlighted the need for the responsible development of digital assets.
The risk assessment agency noted that cryptocurrencies lacked basic risk control systems to prevent the use of excessive leverage and a bank-like run from investors in the event of a market downtrend.
Another top issue is the lack of direct fundamental use cases for cryptos, which are largely speculative. The FSOC also took offense at the businesses operating in the space as they lacked core liquidity depths and their business dealings were quite risky.
Commenting on the report, Treasury Secretary Janet Yellen said the FSOC’s recent release was crucial to efforts to bring about much-needed oversight. Yellen also said the report is a strong foundation for policymakers to work on minimizing digital assets’ financial risks without depriving users of their innovative appeal.
To ensure proper regulatory action is enforced, the FSOC report recommended closing gaps in the current laws.
Some loopholes include limited control of spot market activities for cryptocurrencies that are not securities, lack of a comprehensive regulatory framework for crypto firms, and engagement in regulatory arbitrage by separating businesses across several industries. Additionally, several crypto businesses have offered retail investors and services primarily executed by traditional regulated intermediaries like banks and brokerages.
The government agency also offered suggestions to help the broader US regulatory landscape monitor the fast-paced emerging market. According to the FSOC, legislation should allow regulatory agencies to make rules over the spot market that caters to non-security assets.
Additionally, the agencies should be empowered to look into the activities of all affiliates and subsidiaries of crypto businesses while looking into the risks of privately-run stablecoin services to address regulatory arbitrage.
The last option was to examine the growing vertical integration of crypto services with regular financial transactions by enabling agency members to access relevant data to monitor, supervise, and regulate such crypto-powered activities.
IMPT’s Strong Market Appeal
As global regulators continue to push back on traditional cryptocurrencies with little to no utility, new restrictions might crop up for these assets. Despite these limitations, a few opportunities abound for savvy investors who can pick diamonds in the rough. One of such diamonds is the IMPT protocol which has been dubbed the greenest cryptocurrency on the planet thanks to its focus on minimizing the greenhouse effects of digital assets.
!! $IMPT PRESALE IS LIVE !!
⏰ Hurry before stage 2 price increases to $0.023 ⏰
— IMPT.io (@IMPT_token) October 4, 2022
Investors can buy IMPT tokens on presale right now and on the path as the next coin for a 50X gain.
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