Regulators will keep a close watch on banks’ exposures to cryptocurrencies. Credit: Kanchanara on Unsplash.

Top US banking watchdogs have issued a fresh warning to banks about the risks posed by crypto assets. 

In a joint statement, the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) voiced their concerns over the volatile asset class.

Go deeper with GlobalData

Premium Insights

The gold standard of business intelligence.

Find out more

“The events of the past year have been marked by significant volatility and the exposure of vulnerabilities in the crypto-asset sector. These events highlight a number of key risks associated with crypto-assets and crypto-asset sector participants that banking organizations should be aware of,” the joint statement read.

The warning comes almost two months after the collapse of cryptocurrency exchange FTX Group, which rattled the digital assets market.

Specifically, the regulators have asked banks to be wary of frauds, scams, and legal uncertainties related to the custody of digital assets. 

Banks have also been warned of false or misleading claims and disclosures made by crypto-asset companies and volatility in crypto markets.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The regulators also stated that issuing or holding crypto-assets issued, stored, or transferred on an open, public, and/or decentralised network is “highly likely to be inconsistent with safe and sound banking practices.”

“It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system,” the regulators said, adding that they are supervising banking entities that may be exposed to crypto-related risks.

The agencies will keep a close watch on banking firms’ exposures to cryptocurrencies, they said.