The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), have joined once again in issuing a warning on crypto. Last month, the three federal entities issued a statement cautioning banks on providing crypto services. Today’s statement cautions of liquidity risks to banking firms in regards to crypto.
The agencies state that “crypto-asset-related entities may pose heightened liquidity risks to banking organizations due to the unpredictability of the scale and timing of deposit inflows and outflows.”
- Deposits placed by a crypto-asset-related entity that are for the benefit of the crypto-asset-related entity’s customers (end customers).
- Deposits that constitute stablecoin-related reserves.
The agencies add:
“… it is important for banking organizations that use certain sources of funding from crypto-asset-related entities, such as those described above, to actively monitor the liquidity risks inherent in such funding sources and establish and maintain effective risk management and controls commensurate with the level of liquidity risks from such funding sources.”
In the past few months, the federal government has ramped up its rhetoric in regard to the risk of digital assets following last year’s crypto contagion and collapse of FTX due to allegations of rampant fraud.
The statement is viewable here.