The U.S. Office of the Comptroller of the Currency is issuing a joint statement along with the Federal Reserve (FDIC), urging banks to be more aware of crypto-related risks.
This statement is made two months after the collapse of crypto exchange FTX. Many investors were unable to withdraw their funds.
In 2022, the digital assets Terra (LUNA), Three Arrows Capital (3AC), and Celsius Network all saw their death.
“The events of the past year have been marked by significant volatility and the exposure of vulnerabilities in the crypto-asset sector. These events highlight a number of key risks associated with crypto-assets and crypto-asset sector participants that banking organizations should be aware of.”
The agencies stated that the collapse of large crypto firms highlights the serious risks facing the industry and they will continue their cautious approach to current and future crypto-related activities.
“It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system.”
OCC, FDIC, and Fed all state that there are significant safety and soundness issues with crypto-focused models of business and concentrated exposure to this new asset class.
“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.”
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