FDIC tells banks to report crypto asset activities

US regulator Federal Deposit Insurance Corporation (FDIC) told supervised institutions that intend to engage in, or that are currently engaged in, any activities involving or related to crypto assets to report them to the FDIC for supervisory guidance. FDIC said it is “concerned that crypto assets and crypto–related activities are rapidly evolving, and risks of this area are not well understood given the limited experience with these new activities.”

“The FDIC is concerned that certain crypto assets or crypto-related activities may pose systemic risks to the financial system. Systemic risks could be created as an unintended consequence resulting from the structure of a crypto asset or through the interconnected nature of certain crypto-related activities. For example, a disruption in crypto asset transactions or crypto-related activities could result in a ‘run’ on financial assets backing a crypto asset or crypto-related activity. Like other runs, this could create a self-reinforcing cycle of redemptions and fire sales of financial assets, which, in turn, could disrupt critical funding markets. Further, operational failures related to crypto assets or crypto-related activities could have a destabilizing effect on the insured depository institutions engaging in such activities.”

“An FDIC–supervised institution that engages, or intends to engage in, any crypto–related activities should notify the FDIC and provide any information requested by the FDIC that will allow the agency to assess the safety and soundness, consumer protection, and financial stability implications of such activities,” the FDIC wrote in a letter.

Read the full letter

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