The Treasury Department warned Monday that unregulated cryptocurrencies could pose a risk to the U.S. financial system. The warning was a part of the first major public report released by the Treasury’s Financial Stability Oversight Council on digital assets. The council identified digital or “crypto” assets such as stablecoins as well as lending and borrowing on the industry’s trading platforms as an “important emerging vulnerability.” “The report concludes that crypto-asset activities could pose risks to the stability of the U.S. financial system and emphasizes the importance of appropriate regulation, including enforcement of existing laws,” Treasury Secretary Janet Yellen said. “It is vital that government stakeholders collectively work to make progress on these recommendations.” The council first designated digital assets a priority area in February. Global crypto-asset market capitalization reached a peak of roughly $3 trillion last November, comprising approximately 1% of global financial assets, according to the report. Though the impact is relatively small in the larger global financial system, digital financing is quickly gaining in popularity and is being manipulated by criminals for illegal gain, according to the report.
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