Banks ought to be extra cautious on crypto contagion dangers, U.S. regulators warn

By Hannah Lang

(Reuters) -Banks ought to concentrate on key dangers related to cryptocurrency, together with authorized uncertainties and inaccurate or deceptive disclosures by digital asset companies, U.S. financial institution regulators mentioned on Tuesday, lower than two months after the collapse of crypto change FTX surprised monetary circles.

Of their first joint assertion on crypto, the Federal Reserve, Federal Deposit Insurance coverage Corp and the Workplace of the Comptroller of the Foreign money additionally mentioned that they’ve security and soundness considerations with financial institution enterprise fashions which have concentrated publicity to the crypto sector, or these which might be extremely concentrated in crypto-related actions.

The companies added that banks’ issuing or holding crypto tokens which might be saved on a public, decentralized community are “extremely doubtless” to be inconsistent with protected and sound banking practices, doubtlessly dealing a blow to a number of banks’ efforts to supply crypto providers to their clients.

The assertion comes after months of hesitancy from the banking regulators to problem uniform steering or guidelines on cryptocurrency, at the same time as banks have expressed a want for elevated regulatory readability.

The OCC has beforehand mentioned banks should get hold of regulatory approval earlier than partaking in sure crypto-related actions, reminiscent of holding tokens on behalf of shoppers, whereas the Fed has instructed banks to inform their supervisors earlier than shifting ahead with any efforts involving crypto.

(Reporting by Hannah Lang in Washington; Modifying by Chris Reese and Andrea Ricci)

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