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Cryptocurrencies represent a different form of payment, but distributed ledger technology raises regulatory issues



A watchdog within the U.S. Department of the Treasury believes that centralizing the ledger to store information can create "many challenges."

On December 13, the Financial Stability Regulatory Commission (FSOC) of the U.S. Treasury Department released its annual report on the financial market conditions and the national economy (the full text of the coin bank ). Founded in 2010, FSOC aims to monitor and report financial risks in the United States market after the Todd Fluor Federal Financial Supervision Act was introduced.

The report explains in detail that "cryptocurrencies represent a different form of payment," pointing out that "although only a small fraction of the population is currently using cryptocurrencies," banks and other existing financial service providers are also entering the market. "

Like the rest of the regulatory ecosystem in the United States, the FSOC states in its report that the use of decentralized ledger technology may present some problems for regulators, especially since it stores information on a distributed network rather than A central place.

The author of the report wrote:


Like all other new developments, virtual currency and distributed ledger technologies can create risks and vulnerabilities that require us to continue regulatory monitoring and coordination, and in particular, decentralized data storage brought by distributed ledgers may challenge surveillance And regulation because the current regulatory implementation is designed for a more centralized system.
In addition to these potential issues, the FSOC report states that the use of cryptocurrencies and blockchains is currently "small in size but growing in scope" overall. Although the impact of these technologies on the broader financial system is now considered to be "likely to be limited", its applicability to payment and financial infrastructure warrants further examination.

The report said:


However, as more and more market participants and financial institutions invest in these areas, financial regulators want to monitor and analyze their impact on financial stability. "