In its annual risk report, the Federal Deposit Insurance Corporation (FDIC) sounds the alarm about the possible dangers that crypto-related activities could pose to the American banking system. An approach motivated by the desire to prevent the risks of a possible bankruptcy of the major Pro-cryptos banks that occurred at the beginning of the year.
The crypto landscape in the sights of the FDIC
Concerns persist within the US banking system over the implications of crypto-related activities. US regulators have scrutinized Bitcoin and other cryptocurrencies. However, the bankruptcy of FTX marked a turning point, intensifying the crackdown on companies in the field.
In his report 2023 Risk Report, the Federal Deposit Insurance Corporation (FDIC) highlights concerns about the potential consequences of crypto-related activities on the US banking system.
As the body that guarantees deposits and oversees financial institutions in the United States, the FDIC has alerted to the potential for complex and difficult to assess risks associated with cryptos in the banking industry.
Following the tension that marked the crypto market in 2022, with the bankruptcies of major companies in the sector such as Celsius and Terraform, having triggered repercussions as far as crypto-focused banks, such as Silvergate and Silicon Valley Bank, the FDIC has recognized the need for more information to more accurately understand and assess the risks associated with these activities.
In response to this concern, the FDIC has recommended new oversight and guidance measures aimed at mitigating risks from cryptos.
” However, as this interest (by some banks in crypto-asset-related activities) has accelerated, the FDIC has determined that more information is needed to better understand the risks associated with these activities. Crypto-assets, by their dynamic nature and rapid pace of innovation, present “new and complex risks that are difficult to fully assess“, said the FDIC.
Surveillance and prevention initiatives
During 2022, the FDIC encouraged financial institutions under its supervision to disclose their crypto-related activities. At the same time, it established rules aimed at countering misleading declarations concerning deposit guarantees.
Together with other federal banking agencies, she stressed the importance of conducting crypto-related activities in compliance with applicable laws and regulations, while encouraging banks to continue to provide services adapted to their customers.
The FDIC, along with other U.S. banking regulators, will persist in their vigilance over the operations of financial institutions engaged in cryptocurrencies.
They undertake to maintain an ongoing dialogue and to issue additional directives to preserve the stability and integrity of the banking system. As crypto companies face a harsh crackdown in the United States, this caveat could serve as additional justification for regulators, such as the SEC, to legitimize their actions.
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