The Federal Deposit Insurance Corporation (FDIC) says it is working with other federal authorities to keep a close eye on how banks deal with crypto assets.
In a new risk review report, the FDIC says that crypto assets present “novel and complex risks” to the financial system stemming from the presence of fraud and the rapid pace of its innovation.
The FDIC also says that the sector’s interconnectedness with parts of the financial system could present contagion risks for US banks.
“Crypto-assets present novel and complex risks that are difficult to fully assess.120 Part of the difficulty in assessing these risks arises from the dynamic nature of crypto-assets, the crypto marketplace, and the rapid pace of innovation. Some of the key risks associated with crypto-assets and crypto-asset sector participants include those related to fraud, legal uncertainties, misleading or inaccurate representations and disclosures, risk management practices exhibiting a lack of maturity and robustness, and platform and other operational vulnerabilities.
Possible contagion risk within the crypto-asset sector resulting from interconnections among certain crypto-asset participants may present concentration risks for banks with exposure to the crypto-asset sector. Susceptibility of stablecoins to run risk can create the potential for deposit outflows for banks that hold stablecoin reserves.”
The agency says that it is coordinating with central banking agencies to keep an eye on how banks deal or become exposed to crypto assets, and is prepared to start “supervisory discussions” with banks on the matter.
“The FDIC, in coordination with the other federal banking agencies, continues to closely monitor cryptoasset-related exposures of banking organizations. As warranted, the FDIC will issue additional statements related to engagement by banking organizations in crypto-asset-related activities. The FDIC also has developed processes to engage in robust supervisory discussions with banking organizations regarding proposed and existing crypto-asset-related activities.”
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