The Federal Reserve, FDIC, and OCC recently released a Joint Statement on Crypto-Asset Risks to Banking Organizations.
If you’ve been paying attention to headlines lately, you know that there has been extreme volatility in the crypto-asset industry. The statement points out it is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system. A few of the risks noted include:
- Risk of fraud and scams among crypto-asset sector participants.
- Inaccurate or misleading representations and disclosures by crypto-asset companies, including misrepresentations regarding federal deposit insurance, and other practices that may be unfair, deceptive, or abusive, contributing to significant harm to retail and institutional investors, customers, and counterparties.
- Risk management and governance practices in the crypto-asset sector exhibiting a lack of maturity and robustness.
The agencies are using extreme caution when it comes to their supervision of banking organizations that may be exposed to such risks and are carefully reviewing any proposals from banking organizations to engage in activities that involve crypto-assets.
They also point out that banking organizations should ensure appropriate risk management, including board oversight, policies, procedures, risk assessments, controls, gates and guardrails, and monitoring, to effectively identify and manage risks.
Published
2022/01/10
