The news: The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) came together to release the first-ever joint statement on the risks of the crypto market to the banking system, per a press release.
Key risks: The statement began by acknowledging the harrowing year the crypto industry has just faced. As the agencies dealt with successive challenges, they compiled a list of risks that banks must consider before engaging in crypto activities. The final list includes:
A not-so-firm stand: The joint press release is the closest thing to a formal stance that US regulators have taken on the crypto sector. But the statement fell short of specific guidance for banks wishing to engage in the digital asset markets.
Notable absences: Tensions ran high among all regulators last year regarding which agency had regulatory authority over digital assets. Though the joint statement is the first demonstration of federal banking agencies working together, a few agencies were notably missing from the press release. The Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Consumer Financial Protection Bureau (CFPB) weren’t part of the statement, but each has made a play at power.
Our take: The fallout of the FTX collapse is putting pressure on regulators to finally lay out formal guidance and rules for banks and crypto firms. Until now, regulators have taken a casual approach to crypto regulation by making informal statements or occasionally asserting authority through investigations. This formal press release could foreshadow something more concrete that’s still to come. But without all agencies acting in concert, their power struggle will override any attempt at reining in the crypto sector.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
11 Times SquareNew York, NY 100361-800-405-0844