US Regulators Warn Banks About Cryptocurrencies: ‘Significant Risks’

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LThe US Federal Reserve (Fed) and two US regulators on Tuesday warned the US banking sector about the risks associated with cryptocurrency activity, nearly two months after the collapse of industry giant FTX.

For commercial banks, activity related to cryptocurrency is “highly likely to be inconsistent with safe and sound banking practices,” the Fed, the federal agency responsible for guaranteeing bank deposits (FDIC), and the OCC stated in a joint press release. , which oversees two-thirds of the US banking system.

Thus, “Given the significant risks highlighted by the recent failures of several large crypto-active firms, agencies continue to take a cautious and careful approach to current or proposed crypto-active activities and exposures in each banking organization,” they add.

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The Fed, FDIC and OCC consider it “important that risks in the cryptoasset industry that cannot be mitigated or controlled do not migrate to the banking system.”

However, banks remain empowered to provide their customers with services related to these assets.

US Treasury Secretary Janet Yellen had in mid-November strongly pleaded for “more effective oversight” of the cryptocurrency market, immediately following the shutdown of the FTX trading platform. Several Fed officials had also wanted regulation of the sector.

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In addition, the Biden administration is still working on whether to create a cryptodollar, which offers many benefits and opportunities, but also risks.

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