US agencies outline risks of crypto to banking system
US agencies the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have outlined the risks from crypto-assets to banking organisations.
US agencies outline crypto risks to banking sector
The agencies say they have “significant safety and soundness concerns” with business models that are concentrated in crypto-asset-related activities or have exposure to the crypto-asset sector.
As a result, in a year marked by “significant volatility” in the cryptosphere, the agencies have highlighted a number of “key risks” that banking organisations should consider.
Among these risks are frauds and scams, legal uncertainties around custody practices and ownership rights, significant volatility in crypto-asset markets, and risks associated with wider decentralised finance networks.
The agencies emphasise the importance of ensuring that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system.
Between them, the group are keeping a close eye on developments, building up “knowledge, expertise and understanding” of the sector in order to protect banking organisations, customers and the broader US financial system.
“Given the significant risks highlighted by recent failures of several large crypto-asset companies, the agencies continue to take a careful and cautious approach related to current or proposed crypto-asset-related activities and exposures at each banking organisation,” the group add.
