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Fed: Bank With Crypto Companies at Own Risk, Warns Top Regulator

Fed: Bank With Crypto Companies at Own Risk, Warns Top Regulator thumbnail

Banks should take heightened liquidity risks into account when dealing with cryptocurrency companies, warned a top regulator with the Fed.

The Federal Reserve’s vice chair of supervision Michael Barr, speaking at DC Fintech Week, said the interconnection between crypto companies during the market downturn over the past year highlighted the potential risks for banking organizations that become involved with them.

“When a bank’s deposits are concentrated in deposits from the crypto-asset industry or from crypto-asset companies that are highly interconnected or share similar risk profiles, banks may experience deposit fluctuations that are correlated and closely linked to broader developments in crypto-asset markets,” Barr explained.

Confusion caused by crypto companies making misrepresentations about

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