The U.S. Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) issued a joint statement on Tuesday to warn banks of the risks associated with crypto assets.
See related article: US bill set to demand know-your-customer from crypto companies
Fast facts
- According to the trio of U.S. banking regulators, financial institutions must watch out for cryptocurrency-related frauds and scams, misleading representations and disclosures from firms, market volatility, stablecoins and exposure to contagion from the industry.
- The regulators wrote in the statement that issuing or holding crypto assets on a decentralized network is inconsistent with safe and sound banking practices, but added that organizations should not be discouraged from providing such services if permitted by law.
- Cryptocurrencies, led by Bitcoin, often attract investors for their ability to eliminate third-party intermediaries in financial transactions, such as banks, with blockchain technology.
- Regulators around the world have accelerated their move into the cryptocurrency industry following the November 2022 collapse of the Bahamas-based exchange, FTX.com, following a slew of revelations of poor disclosure and alleged misappropriation of client funds.
- Its founder and former chief executive, Sam Bankman-Fried, is on trial for charges including fraud and money laundering.
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