2023-08-15 23:10:10
© Reuters. Cryptocurrencies pose risk to US banking system, says FDIC
CriptoFácil – In its annual risk report, the FDIC (Federal Deposit Insurance Corporation), the US federal bank deposit guarantee agency, warned that cryptocurrencies pose risks to the US banking system.
According to the FDIC, cryptocurrencies present “new and complex risks that are difficult to fully assess.” This is because digital assets have a “dynamic nature”.
“Some of the key risks associated with crypto assets and crypto industry players include those related to fraud, legal uncertainties, misleading or inaccurate representations and disclosures, risk management practices that exhibit a lack of maturity and robustness, and platforms and other operational vulnerabilities” , highlighted the FDIC.
Furthermore, the report pointed out a possible risk of contagion within the cryptocurrency sector. After all, many companies in the sector are connected. And this, according to the FDIC, may present concentration risks for banks with exposure to the crypto sector.
The report also addressed stablecoins in particular. The FDIC claimed that these cryptocurrencies are susceptible to risk and could create the potential for outflows of deposits at banks that hold stablecoin reserves.
FDIC Measures for Cryptocurrency Risks
The FDIC said it has taken several actions in light of these emerging risks. This is because the agency is aware that some banks are interested in cryptocurrency-related activities. In April 2022, for example, the FDIC issued Financial Institution Letter (FIL) 016-2022.
The instrument requests institutions overseen by the FDIC to notify the body of cryptocurrency-related activities in which they are involved or intend to be involved. Activities include custody, maintenance of stablecoin reserves, issuance of cryptocurrencies, acting as a market maker, participating in blockchain-based settlement or payment systems, among others.
Also according to the document, since 2022 the FDIC has already taken action against more than 85 crypto entities. These companies “misrepresented the nature, extent, or availability of deposit insurance,” as the FDIC pointed out. In some cases, these companies have made misleading claims regarding crypto assets being eligible for FDIC insurance.
“The FDIC, in coordination with other federal banking agencies, continues to closely monitor the crypto-related exposures of banking organizations,” the FDIC said.
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