US to crack down on cryptocurrencies
 

Risk to financial stability

US Federal Reserve chief Jerome Powell warned that cryptocurrencies pose risks to financial stability and that greater regulation is in the works.

Meanwhile, the Treasury Department is worried that wealthy individuals could use the largely unregulated sector to avoid tax and said it wanted big crypto-asset transfers reported to authorities.

The two announcements put the fear of Jehovah into the cryptocurrency market, which is currently being run like a get rich quick Ponzi scheme. Bitcoin, the most popular cryptocurrency, fell 30 percent on Wednesday after China announced new curbs on the sector. If the US follows suit then it could be terrible news for the industry.

It is not the technology that is the problem. Powell said that the Fed is looking into adopting a digital currency of its own, more the way that is being run.

While highlighting the potential benefits of advances in financial technology, Powell said cryptocurrencies, stablecoins and other innovations “may also carry potential risks to those users and to the broader financial system”.

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