The US chief financial watchdog, the Financial Stability Oversight Board (FSOC), claims that Bitcoin and other cryptocurrencies do not pose a threat to existing financial systems around the world. In its 152-page report, the FSOC stated that virtual currencies are only utilized by a very small number of consumers and their underlying Blockchain technology offers potential in various industrial applications.

“Virtual currencies are only used by a very small number of consumers. We give a bit more credit to the potentially much broader applications of the so-called distributed ledger technology underpinning the innovations. It is noteworthy that this digital wave also presents a regulatory challenge, because the storage of data is decentralized, rather than being in one spot that governments can watch.”

Other highlights of the report

The report’s view on digital currencies is somewhat surprising due to the negative stance shown by several financial industry personalities. An example is a recent claim by JPMorgan Chase CEO Jamie Dimon, that Bitcoin is a ‘fraud’ and should not be taken seriously.

The report also cited various monetary threats, geopolitical risks and cybersecurity threats that confront the global financial system. Bitcoin was not cited as a threat.

Performance of the digital currency market

The virtual currency market registered considerable growth throughout 2017. However, despite its phenomenal growth, the market’s total combined value is still significantly below $1 trillion and likely too small to be a systemic threat to the global financial sector. At the same time, the potential that could be unleashed by cryptocurrencies is extreme.