Banking regulators are worried about crypto. Again. On January 3, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (OCC) issued a joint statement warning about “significant” risks crypto assets may pose to the broader banking system.
“It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system,” the agencies said in the statement. “Given the significant risks highlighted by recent failures of several large crypto-asset companies, the agencies continue to take a careful and cautious approach related to current or proposed crypto-asset-related activities and exposures at each banking organization.”
Regulators also rattled off a laundry list of crypto-related risks, including fraud, volatility, poor risk management, and contagion within the crypto sector. And their concerns aren’t unfounded. Over the last year, there have been multiple hacks and collapses of several large crypto exchanges, the most recent being FTX. But that doesn’t mean that the crypto industry is doomed.
In this episode of Crypto Monitor, Allison Brickell and Vin Narayanan discuss regulators’ “I told you so” moment, the future of crypto regulations, and more.
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