The Federal Reserve, the central bank of the United States, has officially announced its plans to release a study on the blockchain technology for regulation and security purposes.
Since early 2015, the blockchain market has continuously grown at a rapid rate, due to the sheer volume of capital being injected by leading banks and financial institutions in the development and implementation of blockchain-based systems.
In April 2015, the Office of the Comptroller of the Currency called for innovative regulations on digital currencies and the utilization of blockchain, considering the increasing interests in the blockchain technology and the potential impact a strict regulatory framework could have on the implementation and deployment processes of financial technologies.
The Fed hopes to grasp a comprehensive understanding of the blockchain technology, including its security issues, which Fed governor Lael Brainard believes is the most important aspect of the blockchain technology and any other fintech services commercially available in the market.
While Brainard agrees that the blockchain technology’s ability to reduce friction in cross-border payments and costs for both international and local transactions is important to the financial sector, without proper security measures, it will struggle to deal with various vulnerabilities in