Three US regulators have called on banks to be on their guard against crypto exposure risks in the wake of the FTX collapse.
According to Finextra, the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp said they are stepping up their oversight of banks with business interests in crypto assets, as well as scrutinising any proposals from banks to engage with the crypto sector.
The regulators added that banks issuing or holding crypto tokens stored on public, decentralised networks are ‘highly likely’ to be inconsistent with safe and sound banking practices.
The agencies said, “Given the significant risks highlighted by recent failures of several large crypto-asset companies, the agencies continue to take a careful and cautious approach related to current or proposed crypto-asset-related activities and exposures at each banking organization.”
The New York Department of Financial Services (DFS) recently said that banks need to let it know about any virtual currency plans at least 90 days before commencing the activity. The rules apply even if any portion of those activities are to be conducted by a third party.
“The agencies continue to assess whether or how current and proposed crypto-asset-related activities by banking organizations can be conducted in a manner that is safe and sound, legally permissible, and in compliance with applicable laws and regulations, including those designed to protect consumers,” the regulators concluded.
FTX founder Sam Bankman-Fried recently reportedly pleaded not guilty to charges alleging he defrauded customers.
Bankman-Fried entered his plea in Manhattan federal court where he faces eight criminal counts, including wire fraud and money laundering conspiracy.
Copyright © 2023 FinTech Global
Copyright © 2018 RegTech Analyst
