The Financial Stability Oversight Board (FSOC) is the chief financial watchdog in the United States and recently declared that Bitcoin and other cryptocurrencies do not pose a threat to existing financial systems around the world in its 152-page report. The report covered virtual currencies and explain that they are only used by a very small number of people at the moment and that the underlying Blockchain technology could potentially be implemented in various industrial applications.
“Virtual currencies are only used by a very small number of consumers. We give a bit more credit to the potentially much broader applications of the so-called distributed ledger technology underpinning the innovations. It is noteworthy that this digital wave also presents a regulatory challenge, because the storage of data is decentralized, rather than being in one spot that governments can watch.”
The report gives a perspective on cryptocurrencies that is somewhat different from that of several financial industry personalities, such as Jamie Dimon, JPMorgan Chase CEO, who earlier this year stated that “Bitcoin is a fraud and should not be taken seriously”.
The report also discussed various threats to the current financial system, such as the monetary risks, the geopolitical risks and the cybersecurity threats. However, Bitcoin was not listed as one of these threats.
The virtual currencies market saw unprecedented growth throughout 2017 but despite this, the total market capitalisation still sits well under $1 trillion dollars, therefore being too small to pose a systematic threat to the global financial sector.