U.S. Treasury Report: Regulatory Concerns Concerned with DLT Data Storage

nDespite the current limited impact on the global financial system, the potential of related technologies to be used in payment and financial infrastructures has drawn the attention of regulators. However, Especially the impact on financial stability, as well as the current centralized system of monitoring and control policies. So the United States Department of the Treasury’s Financial Stability Oversight Committee released annual reports on the relevant topics made a detailed introduction and discussion.n
nTranslation: Annie_Xun
Regulators affiliated with the Treasury Department believe the use of decentralized ledgers to store information “poses a potential” challenge to regulators.n
On December 13, the FSOC (Financial Stability Oversight Council) issued the annual report on financial markets and domestic economy. FSOC was founded in 2010 after the passage of Dodd-Frank’s financial regulatory rules to monitor and report the expected market risk in the United States.n
The report details cryptocurrencies “representing different payment methods,” and although only a small fraction of the population is currently in use, “banks and other existing financial services providers have also entered the market.”n
Responding to other areas of the regulatory environment in the United States, the FSOC states in its report that the use of this technology may create problems for regulators, especially where information is stored in distributed networks rather than in centralized locations.n
The report authors wrote:n
n”As with any new development, virtual currency and distributed ledger technologies can create risks and vulnerabilities that require constant regulatory oversight and coordination, and in particular the use of distributed ledgers for de-centralized data storage can present regulatory oversight challenges because Regulatory policies are aimed at a more centralized system. “n
nNot looking at these issues for now, the FSOC report assumes that the current cryptocurrency and blockchain applications are “very small but growing” overall. While it is plausible that the current impact of these technologies on the global financial system may be “limited,” its attractiveness for payment and financial infrastructure will inevitably lead to more regulation.n
nHowever, given the growing number of market participants and financial institutions investing in this area, financial regulators are required to monitor and analyze their impact on financial stability. “n

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