US Financial regulators have warned banks about the security risks posed by the crypto market.
In a joint statement issued on January 3, 2022, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) warned banking organizations of the “key risks associated with crypto-assets and crypto-asset sector participants.”
These include a number of security threats prevalent in the crypto market:
- Risk of fraud and scams among crypto-asset sector participants
- Risk management and governance practices in the crypto-asset sector exhibiting a lack of maturity and robustness
- Vulnerabilities related to cyber-attacks, outages, lost or trapped assets and illicit finance due to open
The statement also highlighted a number of financial concerns with the crypto market, such as its volatility, contagion risk and the susceptibility of stablecoins to run risk.
While the agencies emphasized that banks are not discouraged from providing services to crypto-asset customers, they said it is vital the risks related to this sector “that cannot be mitigated or controlled do not migrate to the banking systems.”
Therefore, they are continuing to assess whether or how current and proposed crypto-asset-related activities by banks can be conducted safely and soundly.
