The US regulators warned of the risks associated with cryptoassets and the participants and banking organizations, as well as the risks of fraud and scams, legal uncertainties, inaccurate or misleading representations and disclosures, and volatility.
The joint statement, which was issued by the Board of Governors of the Federal Reserve, the Office of the Comptroller of the Currency OCC and the Federal Deposit Insurance Corporation FDIC, also called contagion risk, which may result in interconnections among certain cripto-asset participants as one of the concerns, was issued by the Board of Governors of the Federal Reserve.
The joint statement by the US regulators said that it is important that the risks related to the sector that can't be mitigated or controlled do not migrate to the banking system.
The collapse of the trading platform FTX in 2022 has caused concern among regulators. The market has attracted traders and investors who are looking to make quick profits because of the risks and volatility.
FTX, a high-profile exchange, collapsed in November due to misappropriation of customer funds.
The agencies are reviewing any proposals from banking organizations that are likely to engage in activities that involve cryptocurrencies-assets, and are closely monitoring those that are exposed to the risks stemming from the sector.
The statement said agencies continued to take a careful and cautious approach to current or proposed activities related to crypto-asset related activities and exposures at each banking organization because of the major risks highlighted by the recent failures of several large crypto-asset companies.
It said banking organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation.
It noted that banking organizations should ensure appropriate risk management, including board oversight, policies, procedures, risk assessments, controls, gates and guardrails, and monitoring, to identify and manage risks.