Fed Mentions Crypto and Stablecoin Risks, Minutes Show Fed Ready to Take Action- The Coin Leaks

Fed Mentions Crypto and Stablecoin Risks, Minutes Show Fed Ready to Take Action

The Federal Reserve is ready to increase interest rates and cut it’s balance sheet as per minutes published on Wednesday.

Fed officials have agreed that “if inflation doesn’t move downwards as expected then it is appropriate to take action by the committee to reduce policy flexibility at a quicker rate than they currently expect,” said the minutes of the Federal Open Markets Committee’s (FOMC) January meeting.

They also said they believe that “a major reduction in balance sheet size could be the best option.” In the meantime, the Fed has increased its assets total to $9 trillion today from around $4 trillion in the early part of 2020.

The cryptocurrency market, which includes stablecoins was also a subject of discussion at the meeting of the Federal Reserve in January, in the first meeting since June 2021.

Fed officials expressed concern about the rapid expansion of the cryptocurrency market and “some participants were concerned about the risks to stability of the financial system due to the rapid growth of crypto assets and financial platforms that are decentralized,” the meeting summary noted.

Concerning stablecoins, the Fed has warned of a possible run-risk, and described them as “another issue in the financing markets.”

Although the minutes are seen across the country, CoinDesk reported earlier that traders appear to have already made their move and are now focusing upon the Fed Reserve’s upcoming meeting in March. At that time, it is anticipated that the central bank will begin increasing rates.

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