Fed Warns Banks About Liquidity Risks Associated with Crypto Companies
The Federal Reserve has issued a warning to banks about the potential risks associated with providing services to cryptocurrency firms. The warning was issued on Monday by the Federal Reserve Board and the Federal Deposit Insurance Corporation.
The regulators have said that banks should take into account the “liquidity risk” and “operational risk” associated with providing services to cryptocurrency firms. They have noted these risks are heightened due to the “high-risk nature of the activities” conducted by such firms.
The agencies have also warned banks to ensure that they have adequate systems and controls in place to monitor and manage the risks involved, which includes having proper customer due diligence and anti-money laundering programs in place.
The warning comes as regulators across the world are stepping up their scrutiny of cryptocurrency firms. This includes the SEC, which recently issued a statement warning investors of the risks associated with investing in cryptos.
