March 30, 2023
Finance International

US Regulators Warn Banks Over Cryptocurrency Risks

US controllers have handed out their foremost ever mutual alarm to banks over the hazards associated with the cryptocurrency market.

The caretakers notified economic organizations to be wary of likely hoax, lawful tension and deceitful exposures by digital acquisition companies. Banks were also warned over the “contagion risk” from the sector.

It arrives just two months after the destruction of trading forum FTX mailed shockwaves through the crypto enterprise.

In the mutual announcement, the US Federal Reserve, Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency let out they were near surveying the crypto training of banking organizations.

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“The events of the past year have been marked by significant volatility and the exposure of vulnerabilities in the crypto-asset sector,” the statement said.

The regulators also said that issuing or holding crypto tokens, which are stored on public, decentralised networks was “highly likely to be inconsistent with safe and sound banking practices”.

Banks were also encouraged to take steps to avoid problems in the digital asset market spreading to the wider financial system.

“It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system,” it added.

Tuesday’s statement comes after months of hesitancy by US financial industry watchdogs to issue uniform guidelines on cryptocurrencies, despite banks inviting clearer advice from regulators.

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