1 year ago
Federal Reserve Bank Vice Chair Michael Barr said that banks accepting crypto deposits should beryllium alert of their accrued liquidity risks successful an Oct. 12 speech published connected Oct. 17.
Barr stated that determination are heightened liquidity risks erstwhile accepted banks bash concern with crypto firms, arsenic specified banks could beryllium exposed to liability from wealth laundering and fraud.
According to him, the “recent fissures successful these markets person shown that immoderate crypto-assets are rife with risks, including fraud, theft, manipulation, and adjacent vulnerability to money-laundering activities.”
He added that the caller marketplace downturn showed however interconnected crypto assets are, adding that though banks were not straight affected, they tally the hazard of a slope tally successful cases of “misrepresentations regarding deposit security by crypto-asset companies.”
He said the Fed was moving with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) to item these issues to the banks.
Barr said:
“This effort is not intended to discourage banks from providing entree to banking products and services to businesses associated with crypto-assets. Our enactment successful this country is focused connected ensuring risks are appropriately managed.”
Barr’s informing is coming erstwhile accepted fiscal institutions amusement much involvement successful providing crypto-related services. A starring US bank, BNY Mellon, precocious approved adding integer assets custody to its services.
Stablecoin regulation
The Fed’s Vice Chair besides discussed stablecoins which helium claimed posed circumstantial risks to the broader fiscal stability. According to Barr, the Fed has a peculiar involvement successful stablecoins linked to the dollar.
He stated that since the cardinal slope is the superior root of spot for money, stablecoin issuers get that trust, and the Fed wants a national model guarding the space.
“Over time, stablecoins could airs a hazard to fiscal stability, and it is important to get the regulatory model close earlier they do.”
He called connected the US Congress to instrumentality enactment and supply a solid, robust national model that volition let due regulation of stablecoins.
The Vice-chair, who assumed his presumption successful July, besides discussed respective different issues, specified arsenic risks of tokenizing slope liabilities, outgo innovations, including CBDC, and lawsuit autonomy.
The station Fed Vice Chair warns banks astir crypto liquidity, urges stablecoin regulation appeared archetypal connected CryptoSlate.
English (US) 