Bitcoin price drop, FTX deal, liquidity problem of various cryptocurrency platforms… These are all events that lead the authorities to think one thing: cryptocurrencies are unreliable. For some, even putting in place a strict regulatory framework would not be enough to secure this increasingly popular market. Just to mitigate the risks, the American government organizations have just published a joint statement. The main message: Encryption poses a significant risk to banking institutions.
Digital assets have 8 dangers
This isn’t the first time US authorities and financial regulatory agencies have warned banks about the risks associated with cryptocurrencies. However, the warnings tend to intensify after recent events in this market. The latest is a joint statement signed by the Federal Reserve, FIDC and OCC. It was made public on January 3, 2023.
In this statement, the three agencies highlight eight potential crypto risks for banking organizations. In summary, these are:
- fraud risks;
- legal uncertainties relating to cryptocurrencies;
- misstatements and/or misstatements about federal deposit insurance;
- the volatility of the cryptocurrency market;
- the volatility of stablecoins;
- the risks of contagion due to the interconnection of crypto players;
- the absence of a regulatory framework;
- vulnerability to cyber attacks.
There is no way the Federal Reserve, FIDC, and OCC are thinking of banning the use of cryptocurrencies within financial institutions. Furthermore, there is no federal law that criminalizes digital assets, whatever they are. However, the three agencies that signed the statement intend to closely monitor any banking organization willing to engage in cryptographic activities.
According to them, the issuance or holding of crypto-assets (issued, stored or transferred over an open, public and/or decentralized network, or similar public and/or decentralized system) is incompatible with safe and sound banking practices. They note at the bottom of the page that “cryptoasset” refers to any digital asset created using cryptographic technologies.
Of course, the digital dollar project is currently underway. Furthermore, regulators are doing everything possible to define cryptographic regulations adapted to the current markets. If we look at this last statement, however, the adoption of cryptocurrencies by banks will not be soon.
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My name is Ariela and I’m 31 years old. I have been working in the field of web writing for the past 7 years. I only discovered trading and cryptocurrencies a few years ago. But it is a universe that interests me very much. And the topics covered within the platform allow me to learn more. A singer in my free time, I also cultivate a great passion for music and reading (and animals!)