Key points:
- The US Treasury Released a Report on Digital Assets
- The Financial Stability Oversight Council Outlined Risks and Called for Tighter Oversight
- Feds Lose Seized Tokens
The US Treasury Financial Stability Oversight Council has released the initial part of a report highlighting the threats to the US Financial system from digital assets, cryptocurrencies, stablecoins, and in particular, the lending and borrowing of these assets. They have called for tighter regulatory controls. Elsewhere, the Feds had seized Bitcoin snatched back from them.
The US Treasury Released a Report on Digital Assets
The US Treasury Department has warned that the U.S. financial system is at risk from cryptocurrencies and digital assets trading whilst they remain unregulated. The Treasury’s Financial Stability Oversight Council released the first part of a major public report on digital assets and cryptocurrencies on Monday. The report saw the Treasury Department pinpoint digital assets, including cryptocurrencies and stablecoins, alongside the lending and borrowing on the cryptocurrency industry’s platforms as an “important emerging vulnerability.”
The Financial Stability Oversight Council Outlined Cryptocurrency Risks and Called for Tighter Crypto Oversight
The report highlights that although the crypto-asset market capitalisation is only about 1% of financial assets globally and is relatively minor with the scope of the wider global financial system, digital financing is being influenced by criminals for illegal benefits.
Treasury Secretary Janet Yellen said,
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“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”, adding “It is vital that government stakeholders collectively work to make progress on these recommendations
Fed Losses Seized Bitcoin
Separately, US prosecutors have accused Gary Harmon of remotely stealing Bitcoin from a computer the government had previously appropriated in a case against Harmon’s brother, Larry. Larry had pleaded guilty of laundering $311 million via crypto transactions. This case was the first involving crimes connected to “mixing,” which is a process whereby it is far more difficult to trace transactions by heaping together tokens from different owners.
Despite seizing the asset, agents couldn’t access them from Larry Harmon’s storage device as they did not have the correct passphrases to unlock them.
But the Bitcoin started to disappear and although initially accused, Larry and another informant told prosecutors that his brother Gary was the perpetrator. Gary was arrested for money laundering and other crimes in July 2021. He is scheduled to go to trial in February 2023.