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US financial regulators, in their first statement since FTX (FTT-USD) meltdown, advises banks exposed to the cryptocurrency sector to ensure that their activities are “legally permissible” and comply with applicable laws.
Federal Reserve, Federal Deposit Insurance Corporation, and The Office of the Comptroller of the Currency in a joint statement said it believes that issuing/holding cryptocurrency on an open, public, and/or decentralized network “is very likely not suitable for safe bank”.
While they said banking institutions are “neither prohibited nor encouraged to provide banking services to customers of any particular type or category, as permitted by law or regulation”, the authorities is looking at how banks can engage in crypto-related activities while ensuring safety, consumer protection, and legal compliance.
“The authorities are monitoring banking institutions that may be exposed to risks stemming from the crypto-asset sector and carefully consider any proposals from banking institutions to engage in such activities. related to crypto-assets,” the statement read.
Regulators also raised concerns about the safety and soundness of the business models of crypto-related companies.
The collapse of FTX has prompted regulators and legislators to increase oversight of the crypto industry. Specifically, the regulators said that due to the “recent failures of several major crypto asset companies,” they are maintaining a “careful and prudent approach” to their operations and operations. Risks associated with cryptocurrencies at banks.
Sam Bankman-Fried, now-bankrupt co-founder of FTX, reportedly pleaded not guilty all criminal charges in federal court.
