FDIC Includes Crypto in Annual Risk Report

The FDIC Includes Crypto in Annual Risk Report for U.S. Banks

The Federal Deposit Insurance Corp. (FDIC) has officially added cryptocurrency to its annual report on risks facing U.S. banks. The report, titled the 2023 Risk Review, identifies crypto as one of five broad categories of risk. It states that the FDIC is prepared to have “robust supervisory discussions” with the banks it oversees regarding digital assets.

Key Points:

The FDIC includes cryptocurrency as a top priority risk in its annual risk report.
The report reflects on the turbulent year of 2022 for the crypto market.
The FDIC states that it will issue additional statements related to engagement with crypto by banking organizations.
U.S. banking agencies, including the FDIC, have consistently advised banks to exercise caution with digital assets.
The Federal Reserve recently announced a new supervisory program that includes crypto oversight for bank holding companies.

The FDIC’s report does not introduce any new policies, but it aligns with the stance of other U.S. banking agencies that banks should maintain some distance from crypto unless approved by federal regulators. The collapse of several crypto-friendly banks earlier this year, such as Silvergate, Signature, and Silicon Valley Bank, further highlights the risks associated with digital assets.

Hot Take:

The inclusion of cryptocurrency in the FDIC’s annual risk report signals the growing recognition of the potential risks and challenges posed by digital assets in the banking sector. While regulatory agencies continue to advise caution, the increasing engagement and discussions with banks about crypto reflect a changing landscape. As the crypto market evolves, it will be crucial for banks and regulators to find a balance that allows for innovation and growth while managing potential risks effectively.