**FSOC Raises Concerns Over Stablecoin Risks**

The Financial Services Oversight Council (FSOC) has highlighted significant concerns regarding stablecoins, digital assets intended to maintain a stable value. The FSOC warns that these assets could jeopardize financial stability due to inadequate risk management and market concentration.

**Risk Management and Regulatory Needs**

Stablecoins currently lack proper risk management frameworks, making them susceptible to "runs," where mass withdrawals could leave issuers unable to meet obligations. The FSOC cites the TerraUSD collapse as a cautionary example and urges Congress to implement stringent regulations to mitigate risks such as sudden crashes and fraud.

**Market Concentration and Transparency Issues**

The stablecoin market's concentration, with Tether (USDT) holding over 66% of the market, poses systemic risks. The FSOC warns that Tether's potential failure could destabilize both the crypto and traditional financial markets. Additionally, the lack of transparency regarding stablecoin reserves, exemplified by Tether's absence of third-party audits, undermines trust and invites fraud.

**Congressional Action Required**

The FSOC calls for a federal framework to enhance stablecoin safety, focusing on investor protection and market stability. Without legislative action, the FSOC may need to intervene. The council emphasizes that a regulated stablecoin market is crucial for supporting both the crypto ecosystem and broader financial stability.