The post Crypto is still a big risk to America’s financial stability, says Treasury Secretary Janet Yellen appeared on BitcoinEthereumNews.com.

Treasury Secretary Janet Yellen says cryptocurrencies remain a serious threat to America’s financial stability. Speaking during the Financial Stability Oversight Council’s (FSOC) annual meeting, Yellen flagged ongoing vulnerabilities tied to Bitcoin and commercial real estate, even as inflation eases and unemployment stays low. The council, established after the 2008 financial crash, focuses on monitoring systemic risks. This year, its attention has turned to emerging technological threats like artificial intelligence (AI) and blockchain. Yellen emphasized the need for a strong framework to govern stablecoins and other crypto assets, saying the council is pushing for federal laws to address identified risks. The growing regulatory pressure Yellen pointed to AI’s potential for misuse, particularly in areas like discriminatory lending. FSOC’s report warned that AI systems operating as “black boxes” could generate biased or inaccurate results, creating challenges for financial institutions and regulators alike. The council urged financial firms to improve their understanding of AI’s risks while embracing innovation responsibly. “The council continues to call for legislation to create a comprehensive federal prudential framework for stablecoin issuers,” Yellen said. Despite AI’s promise of efficiency, the FSOC remains cautious. The report pointed out the risks of relying on technology for critical financial operations, especially when third-party service providers are involved.  Cybersecurity vulnerabilities also ranked high on the council’s list of concerns, with Yellen calling for increased vigilance across the board. Commercial real estate and hedge fund leverage add to risks High-interest rates, a result of the Federal Reserve’s inflation-fighting policies, are squeezing the sector. FSOC has been monitoring Wall Street’s ability to handle this stress. Credit risks tied to commercial and residential real estate have been flagged as potential threats to financial stability. The council’s report also took a hard look at hedge funds. It highlighted the risks associated with leveraged trading, especially in the…

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Filed under: News - @ December 6, 2024 10:25 pm