The FDIC Releases Evaluation Report on Crypto Asset Risk Strategy
The Federal Deposit Insurance Corporation’s (FDIC) Inspector General’s Office (OIG) has published an evaluation report on the corporation’s strategy for managing crypto asset risk. The report, which has been made available to the public in a redacted version, assesses the FDIC’s approach to understanding and supervising institutions’ crypto-related activities.
The FDIC’s “Bottom Up” Approach to Crypto Risk
In early 2022, the FDIC adopted a “bottom up” approach to assessing crypto risk. This approach involves gaining an understanding of supervised institutions’ activities involving crypto assets and providing case-by-case supervisory feedback. Additionally, the FDIC aims to offer broader industry guidance on a collaborative basis with other agencies.
Gaining Insight into Institutions’ Crypto Activities
To gain insight into institutions’ crypto activities, the FDIC sent out a letter requesting information. As of January 2023, 96 institutions expressed interest in or provided details about their current crypto asset activities. The report does not disclose the number of institutions that received feedback from the FDIC or those advised to pause their crypto-related activities during the assessment period.
Hot Take: Evaluating Crypto Asset Risk in the Banking Sector
The FDIC’s evaluation report on its crypto asset risk strategy highlights its commitment to understanding and mitigating potential risks associated with cryptocurrencies in the banking sector. By adopting a comprehensive approach and engaging with supervised institutions, the FDIC aims to provide effective guidance and supervision in this evolving space. This report serves as an important step towards ensuring the stability and security of the banking system amidst the growing presence of cryptocurrencies.
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