• The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have jointly issued warnings about crypto risks to banking organizations.
• The statement named many risks, including fraud and scams, legal uncertainties, inaccurate or misleading representations by crypto companies, significant volatility in crypto markets, run risks, and contagion risks.
• The regulators emphasized that risks related to the crypto-asset sector that cannot be mitigated or controlled should not migrate to the banking system.
The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have released a joint statement warning banking organizations of the risks associated with cryptocurrencies. The regulators highlighted the significant volatility and exposure of vulnerabilities in the crypto-asset sector and named the various risks that banking organizations should be aware of.
The statement detailed the risks of fraud and scams, legal uncertainties, inaccurate or misleading representations by crypto companies, significant volatility in crypto markets, run risks, and contagion risks. They emphasized that risks related to the crypto-asset sector that cannot be mitigated or controlled should not migrate to the banking system and that business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector are highly likely to be inconsistent with safe and sound banking practices.
The regulators also noted that all banking organizations should assess the risks associated with cryptocurrencies and take appropriate steps to ensure that their activities do not pose any undue risk to their organizations. They encouraged banks to establish policies and procedures, including appropriate due diligence, to manage the risk associated with cryptocurrencies. Furthermore, the regulators warned that banks should ensure that their activities are consistent with all applicable laws and regulations.
The regulators stated that they are committed to ensuring the safe and sound operation of banking organizations and stressed that banks should carefully consider the potential risks associated with crypto-assets and assess them in the context of their overall operations. They urged banks to remain vigilant in monitoring the current and emerging risks associated with cryptocurrencies and to take appropriate steps to manage and mitigate the associated risks.
In conclusion, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have jointly issued warnings about the risks associated with cryptocurrencies and urged banking organizations to assess the risks and take appropriate steps to ensure that their activities do not pose any undue risk to their organizations.