Get All Access for $5/mo

Fed and Bank Regulators Issue Warning Over 'Significant' Risks of Crypto Assets The Fed, FDIC, and the Office of the Comptroller of the Currency (OCC) published a statement warning of "significant" risks posed by crypto assets.

By Steve Huff

Chesnot | Getty Images

On Tuesday, the Federal Reserve, FDIC, and OCC released a joint statement on the risks posed by crypto assets. Among other things, the statement addressed dangers to banks, such as fraud, inaccurate or misleading representations by crypto companies, and market volatility.

According to the agencies, "risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system." The statement said they are cautiously approaching crypto-assets due to several large crypto-asset companies' significant risks and failures (see FTX). The Fed, FDIC, and OCC also said they are evaluating proposed crypto-asset activities and exposures at each banking organization to ensure maximum consumer protection as well as crypto compliance with existing laws.

The statement raised current concerns about cryptocurrency, including legal questions surrounding redemptions and proper crypto asset custody procedures. The statement was published shortly before disgraced FTX crypto exchange co-founder Sam Bankman-Fried, who faces over 100 years in prison if convicted, entered a not guilty plea to charges including conspiracy, wire fraud, and securities fraud.

While the agencies made a point of saying that banking "organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation," they also stated that they "will continue to closely monitor crypto-asset-related exposures of banking organizations."

One thing was clear, despite the equivocations: the Fed, FDIC, and OCC see decentralized systems as akin to a minefield full of peril for uninformed investors:

Heightened risks associated with open, public, and/or decentralized networks, or similar systems, including, but not limited to, the lack of governance mechanisms establishing oversight of the system; the absence of contracts or standards to clearly establish roles, responsibilities, and liabilities; and vulnerabilities related to cyber-attacks, outages, lost or trapped assets, and illicit finance.

Steve Huff

Entrepreneur Staff

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Science & Technology

5 Automation Strategies Every Small Business Should Follow

It's time we make IT automation work for us: streamline processes, boost efficiency and drive growth with the right tools and strategy.

Business News

Former Steve Jobs Intern Says This Is How He Would Have Approached AI

The former intern is now the CEO of AI and data company DataStax.

Leadership

Visionaries or Vague Promises? Why Companies Fail Without Leaders Who See Beyond the Bottom Line

Visionary leaders turn bold ideas into lasting impact by building resilience, clarity and future-ready teams.

Marketing

5 Critical Mistakes to Avoid When Giving a Presentation

Are you tired of enduring dull presentations? Over the years, I have compiled a list of common presentation mistakes and how to avoid them. Here are my top five tips.

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Employee Experience & Recruiting

There's a Growing Demand For This New Type of Professional — Here's Why Your Startup Needs Them, Too.

As startups evolve, a new breed of talent — the "boulder climber" — is emerging: adaptable professionals who balance strategic vision with hands-on execution. Learn why these versatile hires are redefining success in lean, agile teams.