In an annual report released on Friday, the U.S. Financial Stability Board, or FSOC, expressed concern about the adoption of stablecoins and other digital assets. A call coming from the council asks for much closer cooperation between the federal and state authorities in the United States of America with regard to the regulation of cryptos. […] The post FSB identifies stablecoins and crypto as threats to the financial system appeared first on Whaletank Blog - Market Maker News.

FSB identifies stablecoins and crypto as threats to the financial system

In an annual report released on Friday, the U.S. Financial Stability Board, or FSOC, expressed concern about the adoption of stablecoins and other digital assets. A call coming from the council asks for much closer cooperation between the federal and state authorities in the United States of America with regard to the regulation of cryptos.

When it comes to stable cryptocurrencies, or stablecoins as they are widely known, the FSOC said that consumer confidence could be undermined by factors such as lack of liquidity, lack of adequate guarantees, and transparency regarding various regulations. The Financial Stability Board also identified cyberattacks as a big threat to those digital assets. “A run on stablecoins during a bad market situation could potentially have a shock effect on the economy and the entire financial system,” the report said, according to cointelegraph.com

Stablecoins are a means of allowing users to store their money in their digital wallets without being subjected to the same volatility as a lot of other cryptocurrencies tend to have. Users are practically still buying cryptocurrencies – but the main idea behind a stablecoin is that it should not lose nor increase its value over time, thus providing users with a way of keeping their money on exchanges without facing the risks of the volatility in the crypto markets (more exactly, the volatility surrounding cryptos such as BTC, ETH, and various other altcoins).

The report also warned of developments in decentralized financing or DeFi, in which the use of high leverage could trigger a huge selling that might cause the price of the underlying asset to fall even more. This would lead to a cycle of a lot of margin calls, with many traders having their positions automatically be closed, which would cause the prices to continue to drop. In addition, the report stressed that users of these services (DeFi) are subject to “considerable risks from exchange rate fluctuations, operational problems, and cyber attacks”. In the report’s recommendations, the FSOC has been calling for a unified effort between federal and state authorities in order to adopt legislation rules on stablecoins and other digital currencies.

Despite concerns about the highly unregulated nature of the crypto industry, the report highlighted their innovative potential:

“The development of digital currencies and the use of distributed ledger technology offer opportunities for innovation and the modernization of the financial infrastructure. Regulation is critical to the rapidly changing crypto market. “

This year alone was a great one for cryptocurrencies, reaching a combined value of just above $3 trillion in November. The pandemic may have contributed to this, as it is believed that people had more time on their hands during lockdowns, and thus many of them began researching the crypto markets and getting involved.

Follow up with all the cryptocurrency-related news in one place with a unique feature in our Whaletank smartphone app, available for Android devices on Google Play now! We have designed it to keep up on the most influential non-fake resources only, including all kinds of sources such as Presidents, CEO’s, influential individuals in the financial section – whenever they say anything about Bitcoin, you see it first.

This feature collects data from over 100 sources; among them are the largest financial media places such as Forbes, WSJ, Bloomberg, The Telegraph, etc.

Our application also follows regulatory entities such as SEC, IMF, FCA, and important characters such as Donald Trump, Warren Buffet, Bill Gates, and many more financial influencers, even banks and their CEO’s.

Nothing important will slip away from you as long as you follow this amazing feature in real-time.

www.whaletank.trade

The post FSB identifies stablecoins and crypto as threats to the financial system appeared first on Whaletank Blog - Market Maker News.