Stablecoin Adoption Can Impact Economy, Warn Senior US Regulators

A panel of senior financial regulators in the United States has warned the public about the purported risks of stablecoins and cryptocurrencies.

A report issued on Dec. 4 by the Financial Stability Oversight Council 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.

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 and other cryptocurrencies as part of its coverage.

The panel also expressed doubts over so-called distributed ledger technology - 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.

U.S. lawmakers continue to focus on the perceived risks stemming from the cryptocurrency sector, including associated schemes such as Facebook's unlaunched Libra digital currency.