Federal Banking Agencies Issue Joint Statement Regarding Crypto-Asset Risks
On January 3, 2023, the Federal Reserve Board, FDIC, and OCC (collectively, the Agencies) issued a joint statement highlighting banking organizations’ key risks associated with crypto-assets and describing the Agencies’ approach to supervising in the crypto-asset sector.
The joint statement outlines key risks that the Agencies believe banking organizations should be aware of, including:
- Risk of fraud and scams among crypto-asset sector participants;
- Legal uncertainties related to custody practices, redemptions, and ownership rights;
- Inaccurate or misleading representations and disclosures by crypto-asset companies;
- Significant volatility in crypto-asset markets;
- Susceptibility of stablecoins to run risk;
- Contagion risk within the crypto-asset sector resulting from interconnections among certain crypto-asset participants;
- Risk management and governance practices in the crypto-asset sector exhibiting a lack of maturity and robustness; and
- Heightened risks associated with open, public, and/or decentralized networks, or similar systems.
The joint statement reports that the Agencies’ will continue closely monitoring crypto-asset-related risks to banking organizations, their customers, and the U.S. financial system as a whole.
Additionally, the Agencies are assessing banking organizations’ abilities to conduct crypto-asset-related activities in a safe manner that adequately addresses consumer protection and complies with applicable laws and regulations. According to the joint statement, the Agencies currently 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.”
