The global adoption of cryptocurrencies is growing so fast that leading U.S. financial regulators have raised concerns about the risks involved.
You pointed out that climate and crypto are among the potential risks to financial stability.
Financial companies to be monitored
With the emerging threats of current affairs such as digital crypto assets – a sector valued at nearly $ 3 trillion – a council has been created and mandated to oversee the risks to the US financial system.
The Financial Stability Oversight Council (FSOC) is a collaborative body established under the Dodd-Frank Wall Street Reform and Consumer Protection Act. According to the US Treasury Department.
It is headed by Treasury Secretary Janet Yellen and consists of the leading financial regulators, the Federal Reserve, SEC, the currency’s auditor among the 10 voting members and 5 non-voting members such as the director of the Office of Financial Research.
The elite have issued a report highlighting the potential impact of crypto. They identified risks such as Tax evasion, money laundering, and crypto-related crimes such as crypto used in ransomware attacks. Lately, crypto hacks have increased, possibly due to the anonymity involved in crypto transactions.
Earlier this month, BitMart lost nearly $ 150 million in cryptocurrencies after hackers stole a private key and broke into the company’s account.
Additionally, the report also states that digital assets like stablecoins, although marketed as less volatile, can be “illegal funding, national security, cybersecurity, privacy, and international monetary and payment system integrity.”
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Climate change is a concern in most industries, including the financial sector. The US Council recommends investors keep the climate in mind while regulators advise on best practices.
High volatility drives many to crypto
While crypto has turned some lucky investors into millionaires overnight, the sector is considered a risky bet due to its volatility.
This volatility drives many to buy cryptocurrencies primarily for speculative purposes. Recently, there have been predictions that Bitcoin – the largest cryptocurrency by market cap – will hit $ 100,000 either by 2023 or much sooner.
Some investors have high hopes for these predictions, while others may want to consider buying altcoins – alternatives to bitcoin. The most common altcoins are; Ethereum (ETH), XRP, Stellar (XLM), Polkadot (DOT), Monero (XMR), Litecoin (LTC) which are cheap compared to Bitcoin.
This sudden boom and momentum in crypto investing attracts both professional and amateur investors. However, regulators cannot tell how much is directly related to the economy, saying that the investment may not be ideal for many.