On July 14, three US federal agencies released a joint document warning banks about the risks of holding cryptocurrency for their customers.
The Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve Board wrote the statement.
The agencies noted that the document does not set any new rules. Instead, it is intended to guide banks considering entry into the crypto market.
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The document, titled Crypto-Asset Safekeeping by Banking Organizations, outlines several key issues that banks must consider. These include understanding how the technology works, managing the risk of losing customer assets, and meeting existing laws on anti-money laundering and customer protection.
The agencies stressed that holding crypto safely takes a lot of effort and resources. Banks must also remember they are responsible for everything their chosen sub-custodians do.
Even when a bank hires an outside firm to hold crypto, as BlackRock has done with Coinbase
$4.65B
and Anchorage, the bank still bears the final responsibility. If a sub-custodian is hacked or mishandles the assets, the bank could still face the consequences.
Banks are also advised to create robust audit programs that reflect the specific nature of crypto. These programs should include how cryptographic keys are created, how assets are transferred and settled, and how staff are trained.
If a bank lacks the necessary skills or systems, it should consider hiring outside experts to review and improve its cryptocurrency operations.
Meanwhile, Shenzhen officials warned about fake investment schemes tied to stablecoins and other cryptocurrencies. What did they say? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
