Three U.S. financial institutions have joined forces to clarify the FUD regulatory situation that has arisen over the past year related to cryptocurrency banking. They do not endorse crypto banking, but neither do they encourage it, according to the new statement.
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At the start of the new year, The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) jointly released an update on their efforts to maintain sound banking practices and ensure financial system stability amid challenges facing the cryptocurrency industry in 2022. The agencies have been working to resolve past issues and ensure the safety of the financial system going forward.
“Based on the agencies’ current understanding and experience to date, the agencies believe that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices.”
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The Federal Reserve, FDIC, and OCC have expressed concern about the risks posed by the volatile cryptocurrency market and the potential for these risks to affect the traditional banking system. Despite this, several large US banks have been cautiously offering cryptocurrency investment products to both institutional and retail clients.
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In their statement, the agencies emphasized the importance of ensuring that any risks associated with the cryptocurrency sector that cannot be effectively managed do not spread to the banking system.
Yet, the federal agencies do not prohibit cryptocurrency banking, stressing the further risk mitigation:
The agencies will continue to closely monitor crypto-asset-related exposures of banking organizations.
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