Stablecoin Adoption Can Impact Economy, Warn Senior US Regulators
A panel including U.S. Treasury Secretary Steven Mnuchin and SEC and CFTC chairs voiced concerns about stablecoins becoming more popular in the future.
A report issued on Dec. 4 by the Financial Stability Oversight Council (FSOC) highlighted potential problems resulting from stablecoins gaining wider recognition.
The FSOC was set up in 2008 to combat risks to the financial sector after the financial crisis. The panel is headed by United States Secretary of the Treasury Steven Mnuchin. Its voting members include Jay Clayton, the chairman of the Securities and Exchange Commission (SEC), as well as Heath Tarbert, who recently took over as chairman of the Commodity Futures Trading Commission (CFTC).
FSOC: stablecoins “could affect wider economy”
In its annual report for 2019, the regulators stated, “If a stablecoin became widely adopted as a means of payment or store of value, disruptions to the stablecoin system could affect the wider economy. Financial regulators should review existing and planned digital asset arrangements and their risks, as appropriate.”
The FSOC additionally mentioned Bitcoin (BTC) and other cryptocurrencies as part of its coverage. It appeared unable to draw concrete conclusions about the phenomenon, acknowledging that trading data was “sparse and may be unreliable.”
The panel also expressed doubts over so-called distributed ledger technology (DLT) — a byword for digital currency projects notionally related to blockchain.
“The ultimate success of the technology, including applications in the financial sector, is not yet certain,” the report stated. The FSOC continued:
“Some early efforts have not resulted in the anticipated efficiency gains and other promised benefits, and as a result, have been scaled back, refocused, or abandoned.”
Cryptocurrency suspicions continue
As Cointelegraph reported, Mnuchin has been vocal as a critic of Bitcoin, alluding that the seminal cryptocurrency is likely a passing fad. In a July interview he said:
“I won’t be talking about Bitcoin in 10 years, I can assure you that […] I would bet even in 5 or 6 years I’m no longer talking about Bitcoin as Treasury Secretary. I’ll have other priorities […] I can assure you I will personally not be loaded up on Bitcoin.”