US banking regulator warns of crypto adoption risks

DLT-technology and digital assets, including stablecoins and cryptocurrencies, could broaden the reach of financial services, but banks should deploy such tools with caution. This was stated by OCC within the U.S. Department of the Treasury in a semiannual risk perspective report.

The regulator drew attention to risks of a new asset class. The OCC urged banks and other supervised institutions to obtain approval before offering such services, notably custody, derivatives and access to third-party products.

“This entails ensuring expertise to identify and mitigate strategic, operational, regulatory and reputational risks. Sound governance of products also includes alignment with the bank’s strategic objectives, investment profile, resources and expertise” — the report says.

The OCC pledged in 2022 to issue additional guidance on integrating cryptocurrencies into banks’ product lines.

In May, an interagency sprint began with the participation of Federal Reserve, FDIC and OCC, which will continue in 2022. The result of these efforts will be the delineation of responsibilities for each regulator and the establishment of a mechanism for cooperation.

In November, the President’s Working Group on Financial Markets published a report, in which it enumerated risks associated with stablecoins and recommended that asset issuers be treated as banks.

Pub Semiannual Risk Perspective Fall 2021 by ForkLog on Scribd

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