Cryptocurrency was on the Fed’s meeting agenda last month

[ad_1]

Senior Federal Reserve officials are so concerned about the potential danger cryptocurrencies pose to the financial system that they discussed it in a monthly closed-door meeting in July.

“Some participants cited various potential risks to financial stability, including risks associated with increased use of cryptocurrencies,” according to the minutes of the July 27-28 meeting of the Federal Open Market Committee (FOMC). The US central bank panel sets monetary policy, and interest rate decisions announced at its monthly meetings are the subject of much guesswork and Kremlinology (figuratively speaking).

Released on Wednesday, the minutes do not specify which members of the 11-seat committee expressed these concerns.

A few officials also stressed the need to regulate stable coins, according to the minutes.

Officials noted the fragility and lack of transparency associated with stable coins, the importance of monitoring them closely and the need to develop an appropriate regulatory framework to address any financial stability risks associated with these products, according to the minutes.

While the document does not detail, one of the reasons FOMC members may be concerned is the investments made by stablecoin issuers, which are said to be redeemable 1 to 1 with dollars, and the potential for sale of the underlying assets should these outfits be the subject of a high number of redemption requests simultaneously.

[ad_2]