New Year brings a joint statement by the US federal agencies on crypto safety

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The United States federal bank regulatory agencies such as the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have released a statement on January 3rd regarding the challenges the crypto sector faced in 2022 and their efforts to maintain sound banking practices in the face of these challenges.

The federal bank regulatory agencies stated that it is important to prevent risks related to the crypto asset sector, such as fraud, volatility, and contagion, from affecting the banking system. They identified eight specific risks related to the sector.

The federal bank regulatory agencies stated that banking organisations are not prohibited from providing services to any specific class or type of customer as long as it is permitted by law or regulation. 

However, the agencies warned that issuing or holding crypto assets that are issued, stored, or transferred on an open, public, decentralised network or similar system is likely to be incompatible with safe banking practices as per their current understanding and experience.

The statement indicated that crypto regulation in the United States might change in the future, as the agencies have taken a case-by-case approach to building knowledge, expertise, and understanding of the risks that crypto assets may pose to banking organisations, their customers, and the broader US financial system.

In the past, all of the banking regulatory agencies have expressed concerns about crypto. However, their attitudes towards it are not all negative. For example, a member of the FDIC has been positive about stablecoins. The OCC has been actively engaging with fintech, and the Fed has shown a noncommittal but active interest in central bank digital currency.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash