Fraud, Scams And Contagion Risk: FDIC Outlines Risks And Seeks 'Proposals' From Banks Dealing With Crypto

The cryptocurrency sector was a mess in 2022.

"The events of the past year have been marked by significant volatility and the exposure of vulnerabilities in the crypto-asset sector," according to a joint statement from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.

Banks that get invovled should be aware of the risks, they explained, including fraud, scams, legal uncertainties, inaccurate or misleading representations, contagion risk, opaque lending, "significant volatility" and "a lack of maturity and robustness" in risk management and governance practices in the sector.

See Also: Cryptocurrencies Are A Clear Danger: Reserve Bank of India Governor

The agencies are also reviewing any proposals banks might have on how to engage in activities involving crypto-assets, and how these activities can be conducted in a manner that's safe and legal.

“Banking organizations are not prohibited or discouraged from providing banking services to customers of any specific class or type, as long as it is permitted by law or regulation,” the statement added.

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