On December 14, 2017, the US Financial Stability Oversight Council published its 2017 Annual Report, wherein the potential for blockchain technology was acknowledged.
The USFSOC is no small-potatoes operation. It's comprised of the secretary of the Treasury, who serves as its chair; the Fed Board chair; the director of the Bureau of Consumer Financial Protection; the chairs of the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), the Commodity Futures Trading Commission (CFTC) and the National Credit Union Administration (NCUA); and other luminaries of the finance world. With their nod to blockchain and cryptocurrencies, they further the institutional legitimacy of these new technologies.
The Council operates under three directives: to identify marketplace risks associated with the failure or activities of financial houses (including banks and non-banks); promoting market discipline to reduce expectations of a bailout given a marketplace failure; and to respond to threats that pose economic instability or crisis to the US financial system.
In its latest report, under a subsection titled "New Financial Products and Services," the Council stated cryptocurrencies "represent a different approach to payment."
The report went on to describe some of the underlying principles of blockchain technology. It also indicated that although they represent an alternative payment channel to fiat currencies, cryptocurrencies have yet to go mainstream, saying, "Virtual currencies are only used by a very small number of consumers; about one half of one percent of respondents to the 2015 Survey of Consumer Payment Choice reported using virtual currencies."
The report indicates there is also promise with regard to expanding the use of blockchain technology beyond the confines of issuing cryptocurrency:
"The underlying technology of distributed ledgers, however, could have much broader applications beyond those of virtual currencies. Some financial institutions have implemented such systems in proof of concepts to evaluate the potential for broader adoption in areas such as interbank and intrabank payments, derivatives processing, repo clearing, and trade finance."
Treasury Secretary Steven T. Mnuchin spoke on the efforts from multiple agencies that informed the contents of the report. "The annual report is the culmination of a productive and collaborative process among all of FSOC's members," said Mnuchin. "We received valuable input from the other agencies, and I look forward to working with them on implementing the recommendations."