The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) have issued joint warnings regarding the associated risks of cryptocurrency for banking institutions. “Agencies have identified significant security and robustness concerns with business models that focus on crypto-asset-related activities or have concentrated exposures to the crypto-asset sector,” These regulators stated.
US Regulators Alert Banks of Crypto Risks
The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) issued a joint statement on the potential dangers of cryptocurrency for banking organizations Tuesday.
They noted that the past year had shown the results of “significant volatility and exposure of vulnerabilities in the crypto asset sector.” The Regulators listed various risks, including fraud, scams, legal uncertainty, misleading or inaccurate representations by crypto-companys, extreme volatility on crypto markets, execution risk, and contagion risk. “It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system,” The joint statement emphasizes.
“Based on the agencies’ current understanding and experience to date, the agencies believe that issuing or holding primary cryptographic 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 statement continues with:
Agencies have identified significant security and robustness issues with business models that concentrate on crypto-asset related activities or have concentrated exposures to the crypto sector.
The Federal Reserve, FDIC, and OCC noted that they will “continue to closely monitor crypto asset-related exposures of banking organizations,” concluding:
Banking Organizations must implement proper risk management. This includes board oversight, policies and procedures, risk assessments and controls, security gates, barriers and monitoring. effectively.
What do you think of the joint crypto warnings from the Federal Reserve, FDIC, and OCC? Please let us know your thoughts in the comments section.
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