The Financial Stability Oversight Council (FSOC) is a branch of the U.S. Department of Treasury established under the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 to monitor the stability of the American financial system.
The FSOC is specifically responsible for:
- identifying risks to the financial stability of the United States;
- promoting market discipline; and
- responding to emerging risks to the stability of the United States’ financial system.
The FSOC is comprised of 10 voting and 5 nonvoting members and uses the expertise of both federal and state financial regulators, as well as an independent insurance expert appointed by the President.
On July 15, in a White House Press Briefing, Treasury Secretary Steven Mnuchin discussed the regulatory issues associated with cryptocurrency. The Secretary spoke of the speculative nature of cryptocurrency, the need for regulatory certainty, and the government’s concentrated effort to ensure that the “U.S. financial system is protected from fraud.” In that vein, the Secretary recently established the FSOC’s Working Group on Digital Assets, which “enables U.S. financial regulators… and other key stakeholders to work together to combat risks posed by cryptocurrencies.”
While the Secretary made clear that the “overriding goal is to maintain the integrity of [the U.S] financial system,” he also specified that the “U.S. welcomes responsible innovation including new technologies that may improve the efficiency of the financial system and expand access to financial services.” To achieve these aims, cryptocurrencies, such as Facebook’s Libra, as well as banks and nonbanks, such as PayPal, will be all held equally accountable: “everybody plays by the same rules.”
Regarding the Libra, the Secretary said that he is “not comfortable today” and they “have a lot of work to do,” but seemed to intimate that the Libra Association is perfectly capable of assuaging the Treasury’s concerns.
To view the Secretary’s White House Press Briefing in its entirety, click here.