The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have issued a joint warning about crypto risks to banking organizations.” The regulators elaborated, “The agencies have significant safety and soundness concerns about business models that are concentrated in crypto-asset related activities or have concentrated exposure to the crypto-asset sector.
U.S. regulators warn of crypto risks
The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) on Tuesday issued a joint statement on crypto risks to banking organizations.
They explained that events over the past year “have demonstrated significant volatility and exposure to vulnerabilities in the crypto asset sector.” Regulators cited a number of risks, including fraud and scams, legal uncertainty, inaccurate or misleading representations by crypto companies, significant volatility in the crypto market, execution risk, and contagion risk.” The joint statement emphasizes that “it is important that risks associated with the crypto asset sector that cannot be mitigated or controlled are not transferred to the banking system.
“Based on the Authority’s current understanding and experience to date, the Authority believes that issuing or holding crypto assets as principal that are issued, stored, or transferred on open, public, and/or distributed networks or similar systems is likely to be inconsistent with safe and sound banking practices We believe that it is likely to be,” the statement continues, adding.
The authorities have significant safety and soundness concerns about business models that are focused on crypto-asset related operations and concentrated exposure to the crypto-asset sector.
The Federal Reserve, FDIC, and OCC noted that they “will continue to closely monitor crypto asset-related exposures of banking organizations” and concluded that.
banking organizations need to ensure adequate risk management, including board oversight, policies and procedures, risk assessment, controls, gates and guardrails, and monitoring to effectively identify and manage risks.
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