{"id":66653,"date":"2022-09-04T10:03:51","date_gmt":"2022-09-04T07:03:51","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=66653"},"modified":"2025-09-07T02:28:09","modified_gmt":"2025-09-06T23:28:09","slug":"fed-names-defi-sector-a-potential-threat-to-financial-stability","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/fed-names-defi-sector-a-potential-threat-to-financial-stability\/","title":{"rendered":"Fed names DeFi sector a potential threat to financial stability"},"content":{"rendered":"<p>As the cryptocurrency market\u2019s capitalization grows, the DeFi sector could pose long\u2011term risks to financial stability. This was stated by analysts from the <a href=\"https:\/\/www.federalreserve.gov\/econres\/feds\/files\/2022057pap.pdf\">stated<\/a> group of the Federal Reserve System.<\/p>\n<p>Analysts say the threat stems from the lack of clear regulatory rules for decentralized applications. In the published study, they noted that the sector has not yet become \u201csystemically important,\u201d but authorities should devote greater attention to it.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;The rapid growth in the role of programmable blockchains indicates that policy bodies must begin to give serious consideration to the full spectrum of financial stability issues that could arise if such activity becomes systemically important,&#8221; the document says.<\/p>\n<\/blockquote>\n<p>The Fed emphasised that regulators lack the tools to enforce laws and regulations in DeFi. Analysts say market participants will &#8220;exhaust any and all advantageous opportunities, regardless of watchdog concerns.&#8221;<\/p>\n<p>The Fed has also published a separate <a href=\"https:\/\/www.federalreserve.gov\/econres\/feds\/the-financial-stability-implications-of-digital-assets.htm\">study<\/a> on the impact of digital assets on financial stability. Analysts noted the need for tighter oversight of crypto firms that custody client funds.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Oversight, comprehensive disclosure, as well as capital and liquidity requirements where necessary, can bolster the resilience of digital-asset ecosystem entities. For example, centralized entities acting as counterparties to retail customers typically do not face capital, liquidity, or comprehensive disclosure requirements,&#8221; the report says.<\/p>\n<\/blockquote>\n<p>Analysts say the cryptocurrency industry is prone to accumulate financial vulnerabilities. At the same time, the Fed characterised the risks to economic stability as &#8220;insignificant&#8221;, citing limited interconnection between digital assets and the traditional market.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;If the digital financial system becomes more interconnected with the traditional one or expands the provision of financial services, these risks could quickly become material,&#8221; they added.<\/p>\n<\/blockquote>\n<p>In July 2022, Fed Vice Chair <span data-descr=\"Federal Reserve System of the United States\" class=\"old_tooltip\">the Fed<\/span> <a href=\"https:\/\/u1f987.com\/en\/news\/fed-calls-for-tighter-regulation-of-the-cryptocurrency-industry\">urged tougher regulation<\/a> of the cryptocurrency industry.<\/p>\n<p>Read ForkLog\u2019s bitcoin news on our <a href=\"https:\/\/telegram.me\/forklog\" target=\"_blank\" rel=\"nofollow noopener\">Telegram<\/a> \u2014 crypto news, prices and analytics.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the cryptocurrency market\u2019s capitalization grows, the DeFi sector could pose long-term risks to financial stability. This was stated by analysts from the Fed\u2019s research group.<\/p>\n","protected":false},"author":1,"featured_media":66654,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1093,1249],"class_list":["post-66653","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-defi","tag-federal-reserve-system"],"aioseo_notices":[],"amp_enabled":true,"views":"22","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/66653","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=66653"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/66653\/revisions"}],"predecessor-version":[{"id":66655,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/66653\/revisions\/66655"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/66654"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=66653"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=66653"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=66653"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}