After a volatile past week and tepid weekend trade, cryptocurrencies are trading slightly higher Monday even after the U.S. Federal Reserve identified the recent increase in cryptocurrency asset prices as a clear sign of increased risk-taking by investors.

The overall cryptocurrency market rose 6% Monday compared with the previous day. Bitcoin rose by 3.03% to $34,503.78 per coin while Ethereum increased by 3.61% to $2,167.42.

The Fed's statement is the first time the central bank has singled out cryptocurrency as a factor in its overall assessment of the stability of the country's financial system.

In a section of its semiannual Monetary Policy Report, the agency called on politicians to pay more attention to cryptocurrencies and their growing influence on the financial system.

In the report, the agency highlighted the growing risk cryptocurrency is posing. Up until now, the agency has never used the asset class as a benchmark or as a consideration for broader market conditions.

Federal Reserve chairperson Jerome Powell said the agency should play "a leading role" in the development of infrastructure and international standards for using cryptocurrencies. He said the Federal Reserve is planning to issue a discussion paper later in the year that will look into the advantages and disadvantages of using digital currencies.

In its Monetary Policy Report, the Federal Reserve said some parts of the country's financial system have grown more vulnerable to instability because of the cryptocurrency trends.

"The surge in the prices of a variety of cryptocurrency assets also reflects in part increased risk appetite. Asset prices may be vulnerable to significant declines should investor risk appetite fall, interest rates rise unexpectedly, or the recovery stall," the report said.

According to the central bank's monthly diary, Powell met with cryptocurrency exchange Coinbase head, Brian Armstrong and cryptocurrency advocate, Christopher Giancarlo, before the report was published.

Over the past year, Bitcoin prices have increased by about 300%. Ethereum - the world's second-largest cryptocurrency - has added some 800% in value since last year. In its report, the Federal Reserve issued a formal warning about the general level of cryptocurrency prices.