In a joint statement released today, the Federal Reserve has warned banks to be vigilant about the liquidity risks of cryptocurrencies. Additionally, several US banking regulators have released the statement to ensure that banks are vigilant for cryptocurrency-related customers.
The statement was issued by the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, and was released today. Besides, Reuters reported that this statement urged banks to implement, "robust tools in place to monitor funds placed by crypto-related entities."
The last few weeks have been headlined by a clear manhunt from regulators over the cryptocurrency sector. The US Securities and Exchange Commission (SEC) has led the charge, settling charges made by entities such as kraken and paxos.
Now, the Federal Reserve has issued a warning to banks to beware of the liquidity risk of cryptocurrencies. Specifically, address the volatility of certain deposits and the potential for rapid exits. Reuters first reported on the warning issued by three US regulatory agencies.
According to the report, the statement was organized in the wake of recent events in the sector. In addition, regulators point out โDeposits placed with banks for the benefit of crypto clients, as well as stablecoin reserves, could be subject to rapid outflows.โ
The statement highlighted the risks involved in the volatility of cryptocurrencies, but did not seek to implement any regulatory requirements. Rather, the news comes as the digital asset sector prepares for Chokepoint 2.0. As various regulatory agencies are running some kind of coordinated attack on the sector as a whole.
