A special Supervisory body under the Treasury Department stated that the use of decentralized registries to store the information “may cause problems” for regulators.
The oversight Board the financial stability of the United States (FSOC) published its annual report on the state of the financial markets and the economy on 13 December. FSOC was created in 2010 after the adoption of the law on financial regulation, Dodd-Frank and was designed to monitor the perceived risks for markets in the United States
The report indicates that crypto-currencies “are another approach to payment,” and also notes that, although currently their use is limited to a small part of the population, “banks and other financial service providers also entered the market”.
FSOC noted in the report that the use of technology can cause problems for regulators, particularly in respect of the information, which is stored in a distributed network and not in one Central location.
As with any new technology, virtual currency and technology of the distributed registries can create risks and vulnerabilities that require constant monitoring and coordination of regulatory bodies. In particular, decentralized storage can create problems for control and regulation, since the current practice of regulation was designed to more centralized systems.
The FSOC report States that currently, the use of the cryptocurrency and the blockchain in General is small, but growing. And given that the impact of these technologies on the financial system is currently “probably limited,” the question of its applicability in the payments and financial infrastructure requires further study.
However, in light of the growing number of market participants and financial institutions that invest in these areas, financial regulators, it is desirable to monitor and analyze their impact on financial stability.