US Regulators Warn Banks About Crypto Risks

Two months after the collapse of FTX sent shockwaves through the industry, US regulators warned banks that they should be aware of the risks associated with cryptocurrency assets, including legal uncertainties and misleading disclosures.

KEY LESSONS

• Banks should be aware of the risks associated with cryptocurrency, according to the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.
• The agencies will keep an eye on banking institutions' crypto-asset-related exposures.
• The joint statement comes two months after the collapse of the crypto exchange FTX, which shook the industry.

According to a statement from the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, banks that issue or hold crypto tokens on a decentralized, public network are likely violating safe and sound banking practices. In their first joint statement on the crypto market, the three agencies stated that they will monitor banks' exposure to crypto assets.

Regulators have been hesitant to issue uniform guidance or rules on crypto assets, despite the fact that some banks have expressed a desire for greater clarity. The announcement follows the demise of FTX, whose founder, Sam Bankman-Fried, is due to stand trial in October.