Prudential Regulators Issue Joint Statement on Crypto-Asset Risks

Federal Reserve, FDIC, and OCC statement highlights crypto-asset risks to banking organizations Sullivan & Cromwell LLP - January 4, 2023

On January 3, 2023, the prudential bank regulators released a joint statement regarding banking organizations and the crypto-asset sector. The statement highlights “crypto-asset risks” of which the regulators believe banking organizations should be aware. While acknowledging that banking organizations are, subject to applicable law, neither prohibited nor discouraged from providing services to any particular class of customers, the regulators state that: (1) issuing or holding as principal crypto-assets that are issued, stored or transferred on an open, public, and/or decentralized network or similar system is “highly likely to be inconsistent with safe and sound banking practices” and (2) the agencies have “significant safety and soundness concerns” associated with business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector.

Subscribe to our Memos