US regulators are warning banks to be more cautious when dealing with cryptocurrencies. Key risks for financial institutions include legal uncertainties and false or misleading communications by companies in the digital money sector, the US Federal Reserve, the Deposit Insurance Fund FDIC and banking regulator OCC jointly announced on Tuesday.
Supervisors have security concerns about banks with business models heavily focused on the crypto sector. It is important that uncontrollable risks in this area do not spill over into the banking system.
Crypto exchange FTX filed for bankruptcy protection on Nov. 11 after withdrawing funds in bulk in response to a secret move of $10 billion in customer deposits. Founder and CEO Sam Bankman-Fried resigned as boss the same day. He is on trial in the US for fraud charges, which he denies. FTX’s collapse rocked the crypto world.
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