Nearly two months after the collapse of industry giant FTX, the US central bank (Fed) and two US regulators are alerting the US banking sector to the risks associated with cryptocurrency activity.
Crypto incompatible with banking
The US central bank (Fed) and two US regulators warned the US banking sector on Tuesday of risks associated with cryptocurrency activity, nearly two months after the fall of industry giant FTX.
For commercial banks, cryptocurrency-related activities are “likely inconsistent with a safe and sound banking system,” the Federal Reserve, the federal agency responsible for bank deposit insurance (FDIC) and the Federal Reserve said in a joint news release. OCC. A third of the American banking system.
“Given the significant risks highlighted by the recent bankruptcies of several large crypto-asset companies, agencies continue to take a cautious and careful approach to current or proposed crypto-asset activities and exposures at each banking organization,” they add.
The Fed, FDIC, and OCC believe it is “important that risks in the cryptocurrency industry that cannot be mitigated or controlled, do not migrate to the banking system.”
However, banks still have the right to provide services related to these activities to their customers. In mid-November, US Treasury Secretary Janet Yellen called for “more effective oversight” of the cryptocurrency market following the collapse of trading platform FTX.
Several Fed officials also want to regulate the industry. In the United States, under the leadership of the SEC and its head, Gary Gensler, the Biden administration certainly wants to facilitate cryptocurrency trading, but punish fraud more severely.
For its part, the Biden administration is still studying the possibility of creating a crypto dollar, which brings many benefits and opportunities, but also risks.
At the same time, market platforms, especially the larger ones, such as the world leader Binance, which is based in Hong Kong, or the American Coinbase, listed on Wall Street and therefore endowed with greater transparency, will mobilize their efforts to reassure customers, investors and… regulators.
2023: the beginning of regulation?
After the extravaganzas, falls and scandals of 2021, cryptocurrencies are hoping to get off to a good start in 2023.
A year ago, cryptocurrency specialists still promised a new world, with “increased acceptance of Bitcoin as a means of payment, increased NFT activity” and even the birth of “new currencies dedicated to the Metaverse”.
But soaring interest rates, plunging tech stocks, plummeting cryptocurrency prices, and mounting bankruptcies in the still nascent and fragile ecosystem have somehow shocked even the most optimistic minds.
The year 2023 should mark the end of lax regulation in this market. In Europe, the European MiCA (Markets in Cryptoassets) directive, which specifies the definition of each digital asset and imposes permissions on participants, will take effect from the beginning of 2024, before further tightening of regulations.
The president of the European Central Bank (ECB), Christine Lagarde, has already called for a “MiCA 2”.
The European text is also strongly inspired by the French legislation that fixes the status of digital asset service providers (Psan), framed starting from the 2019 Pacte law by the Financial Markets Authority (AMF).
In other words, it will be necessary to apply for licenses and other registrations before operating anywhere in the Old Continent.
In addition, these service providers will need to prepare next year for the Transfer of Funds Regulations (TFR), which will make it mandatory to identify the originator and payee of cryptocurrency transactions in 2024.