A panel of top U.S. financial regulators including Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell urged federal and state officials to monitor risks from digital assets like bitcoin.
The recommendation came in an annual report published Wednesday by the Financial Stability Oversight Council, set up after 2008 to help identify emerging risks that could trigger a new banking crisis. The panel also includes U.S. Securities and Exchange 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 said.
U.S. lawmakers and administration officials including Mnuchin and President Donald J. Trump have warned of the risks to the financial system from cryptocurrencies and stablecoins like Facebook’s proposed Libra. But some former officials, including ex-CFTC Chair Christopher Giancarlo, have pushed for faster adoption of blockchains, arguing that the country could fall behind other countries as the fast-moving technology develops.
According to the new report, the risks of “existing and planned digital-asset arrangements” could put financial-industry stability in peril “via both direct and indirect connections with banking services, financial markets and financial intermediaries.”
The report also cited “risks to consumers, investors and businesses associated with potential losses or instability in market prices” along with “illicit financial risks; risks to national security; cybersecurity and privacy risks; and risks to international monetary and payment system integrity.”
Mnuchin said in January 2018 that the FSOC had formed a working group focused on crypto. and the council earlier said the use of decentralized ledgers to store data raised challenges for regulators used to centralized systems.