Banking

Banking regulators release cautioning on cryptocurrency threats

Events of the previous year have actually highlighted numerous essential threats postured by cryptoassets that banks ought to think about if they want to provide crypto-related services, the Federal Reserve, FDIC and the Office of the Comptroller of the Currency stated today in a joint declaration. The companies did not single out any particular occasion—like the FTX collapse—however rather noted numerous indications of the “significant volatility and the exposure of vulnerabilities in the cryptoasset sector” that such occasions have actually presumably exposed. Among the threats mentioned are the possibility of scams and frauds, legal unpredictabilities connected to custody practices and ownership rights, and the absence of maturity in threat management practices within the crypto sector.

The 3 companies stated they are continuing to evaluate how banks might offer crypto services in a safe way. However, they included that based upon their existing understanding, “the agencies believe that issuing or holding as principal cryptoassets 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. Further, the agencies have significant safety and soundness concerns with business models that are concentrated in cryptoasset-related activities or have concentrated exposures to the crypto-asset sector.”

Gabriel

A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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