- The Federal Reserve, FDIC, and OCC put an effort to maintain sound banking practices despite the risks of crypto.
- The agencies stressed the need of preventing crypto-related risks from migrating to the financial system.
Federal bank regulatory authorities in the United States have released a statement on the risks of cryptocurrencies to banking organizations. On Jan. 3, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) issued a joint statement regarding the challenges that the crypto sector witnessed in 2022. The US federal agencies also discussed the efforts to maintain sound banking practices despite those challenges.
The authorities stressed the significance of preventing risks from the cryptocurrency industry from migrating to the financial system. According to the organizations, these risks should be mitigated or regulated. They also highlighted eight distinct concerns, including fraud, volatility, contagion, and other well-known issues.
U.S Federal Agencies’ Alert For Banks
The banking organizations are not prohibited or discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation, according to the regulatory agencies.
However, the authorities stated:
Based on the agencies’ current understanding and experience to date, the agencies believe that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system, is highly likely to be inconsistent with safe and sound banking practices.
The agency continued by saying, “Through the agencies’ case-by-case approaches to date, the agencies continue to gain knowledge, experience, and understanding of the risks crypto-assets may pose to banking companies, their clients, and the broader U.S. financial system.”
Moreover, the banking regulatory bodies have previously expressed their concerns regarding cryptocurrencies. The Fed has shown a keen interest in central bank digital money, while the OCC has recently taken steps to get more actively involved with fintech.
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