The US Office of the Comptroller of the Currency (OCC) issues a joint statement with the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) urging US banks to be more cautious about cryptocurrency risks.
This statement comes two months after the collapse of cryptocurrency exchange FTX, which prevented many investors from withdrawing their funds.
Digital asset Terra (LUNA) and cryptocurrency firms Three Arrows Capital (3AC) and Celsius Network also saw their demise in 2022.
“Last year’s events were marked by significant volatility and exposure of vulnerabilities in the cryptocurrency sector. These events highlight a number of key risks associated with crypto-assets and crypto-asset industry participants that banking organizations should be aware of. »
As the collapse of major cryptocurrency firms underscores significant risks in the sector, the agencies say they will continue to approach banks’ current and proposed assets and exposures related to cryptocurrencies with care and caution.
“It is important that risks in the cryptocurrency industry that cannot be mitigated or controlled do not migrate to the banking system. »
The Fed, OCC, and FDIC also say they have significant security and robustness issues with cryptocurrency-centric business models and those with concentrated exposure to the new asset class.
“Based on the Agencies’ current understanding and experience to date, the Agencies believe that the issuance or holding as major crypto-assets that are issued, stored or transferred via an open, public and/or decentralized system, or a such a system, is very likely incompatible with safe and sound banking practices. »
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