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It’s no secret that the world of crypto has faced a reckoning over the past few months, and it’s not just the dude with the Bahamas mansion with Silicon Valley parents (or wait, is that all crypto dudes?). Despite the fair share of memes showcasing lawmakers’ digital learning curve, to put it kindly, regulators are now eager to get the wider crypto debacle under control.
And, promptly into the new year, they did. Soon after Sam Bankman-Fried was indicted and agreed to be extradited to the US, the Federal Reserve, FDIC, and Office of the Comptroller of the Currency penned a letter released this week calling on the banking sector to get hip to the “key risks associated with crypto-assets and crypto-asset sector participants,” detailing a lack of governance controls, contagion concerns, and significant volatility as vulnerabilities in the sector.
It is, however, just a warning…for now. The letter says that while banks are “neither prohibited nor discouraged” from unbanking any specific class or type, the agencies are working to build safeguards around crypto-asset related activities. The agencies also say they are not entirely sold on whether banking organizations can participate in crypto “in a manner that adequately addresses safety” and sound business practices.
For now, there is a warning that banks operate in a “safe and sound” and “legally permissible” manner, almost like when your parents say, “Sure, attend the high school party at the neighbor’s house whose parents are out of town, but use your best judgment.” The FED, FDIC, and OCC said they will be following up, or in elevated language, “issue additional statements related to engagement.” Stay tuned: It sounds like some more crypto kids are bound to get grounded before curfew.—KT