Senators Warren and Smith call on Fed to account for banks’ crypto ties

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Dec 8 (Reuters) – U.S. Senators Elizabeth Warren and Tina Smith are calling on the Federal Reserve and other U.S. financial regulators to report on banks’ cryptocurrency activity and their ties to the industry following the FTX crypto exchange implosion.

“While the banking system has so far been relatively untouched by the latest crypto crash, the collapse of FTX shows that crypto may be more integrated into the banking system than regulators realize,” the lawmakers wrote. to the heads of the Fed, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency in letters dated Wednesday and released by Warren’s office Thursday.

“We are writing to express our concern … and to ask how your agency assesses the risks to banks and the banking system associated with these relationships,” wrote the senators, both Democrats on the Senate Committee on banks.

The letters asked for details about oversight of banks’ cryptocurrency exchanges and loans to crypto firms, and asked whether regulators planned to conduct a review of crypto firms’ relationships with banks. They gave regulators two weeks to respond to their demands.

Lawmakers have launched investigations into the cryptocurrency industry following the collapse of Bahamas-based FTX, which filed for bankruptcy last month after at least $1 billion in funds disappeared clients.

Reporting by Ann Saphir; edited by Jonathan Oatis

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