Federal bank regulatory agencies have issued a joint statement to highlight key risks for banking organisations associated with crypto-assets and the crypto-asset sector.
Its statement extensively lists key risks associated with the crypto-asset sector, which have been demonstrated by the significant volatility and vulnerabilities over the past year.
Some of the risks include a risk of fraud and scams, legal uncertainties related to custody practices, redemptions and ownership rights, inaccurate or misleading representations and disclosures by crypto-asset companies, volatility in the market and more.
Given the risks, the agencies are continuing to take a careful and cautious approach to the current and proposed crypto-asset-related activities and exposures at banking organisations.
Its statement highlighted that the agencies continue to assess whether or how current proposed crypto-asset-related activities by banking organisations can be conducted in a safe manner and compliant with applicable laws.
It said, “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 decentralised network, or similar system is highly likely to be inconsistent with safe and sound banking practices.
“Further, the agencies have significant safety and soundness concerns with business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector.”
The Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) made the joint statement.
The agencies said they would continue to monitor crypto-asset-related exposures of banking organisations. They also plan to issue statements related to engagement by banking organisations in crypto-asset related activities.
Read the full statement here.
Last year, the Federal Reserve accelerated the timing of the launch of its FedNow, a real-time payments service. It is now expected to launch in the summer of 2023.
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