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Federal banking regulators issued a statement highlighting key crypto risks for banking organizations and describing the agencies’ approaches to supervision in this area.
Key Risks: The joint statement cites key risks associated with crypto-assets and the crypto sector, including fraud risk, legal uncertainties, misleading representations, and market volatility. The agencies cited the importance of ensuring crypto risks “that cannot be mitigated or controlled” do not migrate to the banking system, and they said issuing or holding as principal crypto-assets is “highly likely” to be inconsistent with safe and sound banking practices.
Previous Guidance: Previously issued guidance from the Federal Reserve, FDIC, and OCC encourage banks to notify their lead supervisory point of contact of their intent to engage in crypto-related activities. Joint guidance issued in November 2021 summarizes the regulators’ “policy sprints” designed to begin laying the regulatory groundwork on crypto assets.
SBF Plea: The interagency announcement came the same day that FTX founder and former CEO Sam Bankman-Fried pleaded not guilty to federal fraud charges. Investigators charge that Bankman-Fried defrauded FTX customers, FTX investors, and lenders to his Alameda Research hedge fund while violating campaign finance laws.
New Interview: In a recent appearance on Forkast’s “Word on the Block” program, ICBA’s Brian Laverdure said the FTX collapse was the latest in a long string of incidents that highlight the fundamental deficiencies within the crypto markets, which contrast with the safety and security that consumers can find at community banks.
ICBA Position: Laverdure’s appearance—which was picked up by Yahoo Finance, CoinDesk, and others—follows a recent Medium op-ed from ICBA President and CEO Rebeca Romero Rainey that continued ICBA’s call for policymakers to focus on crypto’s role in facilitating financial crimes and to ensure the traditional banking system continues to be a safe haven from the crypto sector’s instability.