A major financial oversight body within the US government created in the wake of the financial crisis has identified bitcoin and distributed ledger systems in general as a potential systemic risk.
The Financial Stability Oversight Committee (FSOC) said in the new report released yesterday that the technology represented an innovation that “appear[s] poised for substantial near-term growth” and that it is reflective of a shifting landscape that merits attention from regulators.
As a broad recommendation, the committee said that regulators should prepare to adjust accordingly if the technology sees broader adoption or outright supplants certain market intermediaries. The issues identified focus on the lack of experience with these systems among participants in financial markets, exposing them to operational and fraud risks.
Beyond that, the FSOC said that the global nature of the technology – and the fact that it transcends legal jurisdictions and national boundaries – will potentially require regulatory cooperation on a similar scale.
The report notes:
“Furthermore, since the set of market participants which makes use of a distributed ledger system may well span regulatory jurisdictions or national boundaries, a considerable degree of coordination among regulators may be required to effectively identify and address