US Federal Reserve and Other Agencies Continue to Warn Banks About Crypto

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The US Federal Reserve and other regulators issued a crypto warning for the banking system on Tuesday, although the statement did not extend any new policies on how traditional lenders handle digital assets.

Given the significant risks highlighted by the recent failures of several large crypto-asset firms, agencies continue to take a cautious and conservative approach to current or proposed crypto-asset-related activities and exposures in every banking organization. , according to the agency’s statement. which also included the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC).

Issuing digital tokens or keeping them on their own balance sheets is very likely to be inconsistent with safe and sound banking practices, the agencies argued. All three regulators said they have significant security and soundness concerns with business models that focus on crypto-asset-related business.

US banking regulators have maintained cautious resistance to cryptocurrency taking a prominent place in the traditional financial system. They allowed some custodial transactions between lenders and the OCC briefly extended interim charters to crypto trust banks, but agency rules now state that a lender must get pre-approval before engaging in any new business. involving this sector.

Last month, the heads of the three agencies agreed with the rest of the Financial Stability Supervisory Board to include cryptocurrencies as a danger zone in the group’s annual report that flags risks to the financial system.

Read more: US regulator ‘incorrectly’ pushing banks to avoid serving crypto companies, lawmaker says

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