FDIC says crypto-assets pose 'novel and complex' risks to the U.S. banking industry

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The FDIC’s annual risk review said crypto-assets present novel and complex risks to the U.S. banking industry that are difficult to fully assess.

- The Federal Deposit Insurance Corporation released its annual risk review that for the first time included a dedicated section on crypto-assets, which the regulator said “present novel and complex risks” to the U.S. banking industry “that are difficult to fully assess.”

The contagion risk within the crypto-asset sector was highlighted as a primary concern for banks as the “interconnections among certain crypto-asset participants may present concentration risks for banks with exposure to the crypto-asset sector,” they said. Stablecoins are also susceptible to a run risk that “can create the potential for deposit outflows for banks that hold stablecoin reserves.”

Since 2022, the FDIC has taken action against more than 85 entities that were misrepresenting the nature, extent, or availability of deposit insurance. In some instances, these firms had made misleading claims in connection with crypto-assets. One of the main liquidity risks highlighted by the regulators is that “certain sources of funding from crypto-asset-related entities may pose heightened liquidity risks to banking organizations due to the unpredictability of the scale and timing of deposit inflows and outflows.”

 

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