The Treasury Department’s Financial Stability Oversight Council (FSOC) analyzed the role of cryptocurrencies’ impact on the US financial economy and suggested the need for an extended crypto regulatory framework to save the traditional financial system.
Despite huge volatility in the price of crypto assets, people show a huge inclination toward the crypto industry. Due to the increasing adoption of stablecoins & Bitcoin-like assets in the world, the majority of financial experts are now studying to figure out the possible risks which may arise because of such rapid adoption of crypto & blockchain backed financial systems over traditional financial systems.
Recently The Treasury Department’s Financial Stability Oversight Council (FSOC) released its report on Cryptocurrencies and claimed that the Crypto industry may negatively impact the traditional financial system.
The FSOC agency mainly pointed out that the Crypto space is interconnected with traditional financial systems and there is no proper & precise regulation system, which is a very big concern.
“(Crypto) interconnections with the traditional financial system or their overall scale were to grow without adherence to or being paired with appropriate regulation, including enforcement of the existing regulatory structure.” FSOC agency stated.
Besides these things, FSOC noted that the interconnection of crypto with traditional financial systems is not at that level where traditional finance is at a risky level but still it could pose a very big risk in near future, as adoption & integration between these two money markets are increasing.
According to FSOC, stablecoins are playing an important role in bringing collaboration between traditional & digital industries, So Stablecoins needed to go under a strict regulatory framework.
No doubt that Stabelcoins like USDT, USDC, and BUSD are playing an important role to help the crypto investors to deal with crypto trading easily and also to move the funds from one exchange to another exchange without any need of third party traditional banking services but due to the failure of Terra USD stablecoin, in May of this year, many US & other countries’ lawmakers showed strict stance on the market business of Stablecoins and proposed strict laws & regulation policies to regulate the backed operations of stablecoins just like traditional Banks.