The U.S. Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) issued a joint statement on Tuesday to warn banks of the risks associated with crypto assets.
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According to the trio of U.S. banking regulators, financial institutions must watch out for cryptocurrency-related frauds and scams, misleading representations and disclosures from firms, market volatility, stablecoins and exposure to contagion from the industry.
The regulators wrote in the statement that issuing or holding crypto assets on a decentralized network is inconsistent with safe and sound banking practices, but added that organizations should not be discouraged from providing such services if permitted by law.
Cryptocurrencies, led by Bitcoin, often attract investors for their ability to eliminate third-party intermediaries in financial transactions, such as banks, with blockchain technology.
Regulators around the world have accelerated their move into the cryptocurrency industry following the November 2022 collapse of the Bahamas-based exchange, FTX.com, following a slew of revelations of poor disclosure and alleged misappropriation of client funds.
Its founder and former chief executive, Sam Bankman-Fried, is on trial for charges including fraud and money laundering.
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