DLT data storage causes surveillance problems

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The U.S. Treasury's Financial Stability Oversight Council (FSOC) has published its annual report on the state of financial markets and the country's economy on December 13. The FSOC was established in 2010 after the adoption of the Dodd-Frank financial regulation act and is designed to monitor and report on perceived risks to markets in the United States.

The report states that cryptocurrencies "represent a different approach to payment," noting that although only a small part of the population currently use them, "banks and other existing financial service providers have also entered the market."

Repeating the other parts of the regulatory ecosystem of the United States, the FSOC notes in the report that the use of technology can lead to problems for regulators, especially with regard to information stored in a distributed network, rather than in one centralized location.

Those potential problems aside, the FSOC report states that currently the use of cryptocurrencies and blockchain in general is "small but growing." And given that the impact of these technologies on the broader financial system is now "probably limited," interest in its applicability to payments and to financial infrastructure requires further study.