US financial regulators have issued a joint statement to banks on the risks of crypto-assets. Will it drive away institutional adoption?
Three US regulators including the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) issued a statement. joint Statement To highlight the ‘major risks’ associated with crypto-assets. This comes in light of the events of the past year, such as the collapse of FTX, lunaThree Arrows Capital, and many other crypto-lending protocols.
The statement further added that the regulatory body will neither prohibit nor discourage banking organizations from engaging with the crypto sector. But, they will closely monitor banks with crypto exposure.
Crypto exchange started with banks
US regulatory bodies want to ensure that crypto-asset risks are not transferred to the banking system. To this end, they are not only monitoring banks that have crypto exposure but will also carefully review future proposals of banks to participate in crypto-related services.
Several notable US banks are involved in providing services related to cryptocurrencies. In April 2022, American investment banking company, Goldman Sachs created a Bitcoinsupported cash credit product, The Bank of New York Mellon, the world’s largest custodial bank, announced in October that they will provide custody services for cryptocurrency assets.
Discrepancies with safe and sound banking practices
The regulators aim to require banks to align activities related to crypto assets with safe and sound banking practices. Crypto services provided by banks must comply with consumer protection, legal permits and other applicable laws and regulations.
According to the statement, “The agencies believe that it is safe and sound to issue or hold a major crypto-asset that is to be issued, stored or transferred over an open, public and/or decentralized network or similar system.” Highly likely to be inconsistent with banking practices.”
Community Hope To see massive de-risking of blockchain-related companies by banks. In contrast, others believe that institutions will figure out safe and appropriate practices.
BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.
#Regulators #Crypto #Follow #Safe #Sound #Bank #Rules