In an annual report published on Fri, the United States Financial Stability Oversight Council, or FSOC, voiced its concern over the adoption of stablecoins and other digital avails.

Regarding stablecoins, the FSOC said consumer confidence could be undermined by factors such every bit illiquidity, lack of appropriate safeguards, opacity regarding redemption rights and cyber attacks. "A run on stablecoins during strained market place conditions may take the potential to dilate a shock to the economy and the financial system," the study said.

The report likewise alerted to developments in decentralized finance, or DeFi, where the utilize of high leverage could trigger a fire auction when the price of the underlying asset declines. This would upshot in a cycle of margin calls and further price declines. In addition, the study outlined that "users of these services face the risk of loss due to market value fluctuations, operational issues and cybersecurity threats, among other risks." In the report'southward recommendations, the FSOC calls for a unified try betwixt federal and country authorities to enact legislation on stablecoins and digital currencies.

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Despite concerns surrounding the much-unregulated nature of the crypto industry, the study highlighted their innovative potential:

"The development of digital assets and the use of associated distributed ledger technology may present the opportunity to promote innovation and further modernization of financial infrastructure. Regulatory attention and coordination are critically important in light of the quickly evolving market place for digital assets."