Financial innovation carries risks that need to be monitored, said a regulatory panel based in the United States. The warning came on Thursday from the Financial Stability Oversight Council (FSOC), which Reuters said looks at risks that threaten the financial system. The concern, hinted the newswire, means that bitcoin and other financial innovations might be more closely regulated in the future.
The FSOC has said in its annual report that “new applications of technology … can be disruptive and can create risks and vulnerabilities that are difficult to anticipate … Accordingly, the Council encourages financial regulators to continue to identify and study new products and services … monitor how they affect consumers, regulated entities, and financial markets and coordinate regulatory approaches.”
This marked the first annual report released during the administration of President Donald Trump. As Reuters stated, the watchdog is being watched to see if there will be a pullback in financial regulations.
Treasury Secretary Steven Mnuchin has stated that the FSOC should coordinate activities tied to reducing at least some financial rules in place for small enterprises and banks. Among the regulations being reviewed: The Volcker Rule, which has a ban in place on proprietary trading activity. Any revisions must come from at least five of the 10 members on the FSOC.
Additionally, the FSOC stated that “Council member agencies should, where possible and without reducing the resilience of the financial system, continue to address regulatory overlap and duplication, modernize outdated regulations, and … tailor regulations based on the size and complexity of financial institutions.”