The Financial Services Oversight Council (FSOC) has raised concerns about the potential threat of stablecoins to the stability of the financial system. In its annual report released on December 6, the council highlighted the lack of necessary risk management standards in these assets, making them vulnerable to risks in the market.
FSOC emphasized that these risks could directly harm the financial stability. According to the report, the risks posed by stablecoins will persist because they do not adhere to crucial risk management standards. FSOC also attributed this to the absence of legislative oversight, which could have helped mitigate these risks.
Therefore, the council called on federal legislators to create a regulatory framework to address these concerns. It also stressed the importance of extending regulations to the wider crypto market in order to facilitate its integration with the traditional market and attract institutional interest.
FSOC has consistently expressed its disapproval of the high degree of concentration in the stablecoin market in recent years. The current report highlights that one entity controls approximately 70% of the total market value.
According to CoinMarketCap, the entire market capitalization of the stablecoin sector is over $205 billion, with Tether holding a dominant share of $136 billion, accounting for 66.3% of the total.
