FDIC sees risks to the banking system from cryptocurrencies

Activities related to crypto assets may present new and complex risks to the U.S. banking system that are difficult to fully assess. This finding appears in the annual risk review FDIC.

The agency noted the dynamic nature and rapid pace of innovation in the digital asset space.

The FDIC noted growing institutional interest in crypto-related activity, which warranted close scrutiny.

In particular, officials cited threats of fraud, legal ambiguities, misleading or inaccurate statements/disclosures, as well as imperfect risk-management practices and platform vulnerabilities.

Analysts also pointed to contagion risks for institutions through their links to the crypto-asset sector.

The review notes the potential for deposit outflows from banks holding stablecoin collateral.

Alongside other financial regulators, the agency recommended further monitoring measures and guidance to address the risks mentioned.

In February 2022, the FDIC’s acting chairman, Martin Gruenberg, said that digital assets and the assessment of related threats became a priority for the agency in its 2022 work plan.

One year later, the ФРС, FDIC and OCC reminded U.S. lenders of the potential risks emanating from crypto-focused firms.

Earlier, the agency accused FTX.US, Voyager Digital and OKCoin of misleading customers.

In May 2023, the FDIC called cryptocurrencies one of the causes of the Signature Bank collapse.