{"id":74619,"date":"2023-02-24T15:46:43","date_gmt":"2023-02-24T13:46:43","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=74619"},"modified":"2025-09-09T21:10:55","modified_gmt":"2025-09-09T18:10:55","slug":"fed-warns-banks-of-liquidity-risks-tied-to-crypto-firms","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/fed-warns-banks-of-liquidity-risks-tied-to-crypto-firms\/","title":{"rendered":"Fed warns banks of liquidity risks tied to crypto firms"},"content":{"rendered":"<p><span data-descr=\"Federal Reserve System of the United States\" class=\"old_tooltip\">Fed<\/span>, <span data-descr=\"Federal Deposit Insurance Corporation of the United States\" class=\"old_tooltip\">FDIC<\/span> and <span data-descr=\"Office of the Comptroller of the Currency, United States Department of the Treasury\" class=\"old_tooltip\">OCC<\/span> issued a joint statement reminding U.S. banking institutions of the potential risks posed by crypto-service-focused firms.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\"><a href=\"https:\/\/twitter.com\/federalreserve?ref_src=twsrc%5Etfw\">@federalreserve<\/a> <a href=\"https:\/\/twitter.com\/FDICgov?ref_src=twsrc%5Etfw\">@FDICgov<\/a> <a href=\"https:\/\/twitter.com\/USOCC?ref_src=twsrc%5Etfw\">@USOCC<\/a> issue joint statement on liquidity risks resulting from crypto-asset market vulnerabilities: <a href=\"https:\/\/t.co\/XDTOB0SvPJ\">https:\/\/t.co\/XDTOB0SvPJ<\/a><\/p>\n<p>\u2014 Federal Reserve (@federalreserve) <a href=\"https:\/\/twitter.com\/federalreserve\/status\/1628772480797089793?ref_src=twsrc%5Etfw\">February 23, 2023<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Regulators cited the \u201cunpredictability of the scale and timing of deposit inflows and outflows\u201d of such institutions.<\/p>\n<p>Listed as risks in the document are:<\/p>\n<ul class=\"wp-block-list\">\n<li>volatility of the crypto market;<\/li>\n<li>bank run risks <span data-descr=\"a situation in which customers begin to withdraw their deposits simultaneously\" class=\"old_tooltip\">(bank run)<\/span> (as occurred with <a href=\"https:\/\/u1f987.com\/en\/news\/terras-death-spiral-how-and-why-luna-and-ust-collapsed\">Terra USD<\/a>);<\/li>\n<li>depegging of <a href=\"https:\/\/u1f987.com\/en\/news\/what-are-stablecoins\">stablecoins<\/a> from parity with fiat currency;<\/li>\n<li>periods of stress and panic among users due to market events, media reports and uncertainty.<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cThe stability of such deposits may be linked to demand for stablecoins, holders\u2019 confidence in the \u2018stablecoins\u2019 and the reserve-management practices of their issuers,\u201d<\/em> the statement explains.<\/p>\n<\/blockquote>\n<p>Regulators urged banks to monitor crypto firms that misstate or deliberately inform customers about the inclusion of client deposits in the FDIC insurance program.<\/p>\n<p>In July 2022, similar claims <a href=\"https:\/\/u1f987.com\/en\/news\/us-authorities-urge-voyager-to-remove-references-to-fdic-deposit-protection\">arose<\/a> against Voyager Digital, which was <a href=\"https:\/\/u1f987.com\/en\/news\/voyager-digital-files-for-chapter-11-bankruptcy\">undergoing bankruptcy proceedings<\/a>.<\/p>\n<p>Liquidity risks for banks may be amplified by close ties among crypto firms or their similar operating profiles. In this case, fluctuations in deposit flows could be highly correlated, the experts explained.<\/p>\n<p>The statement contains no new risk-management principles; it merely reminds banks to apply existing ones.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cCredit institutions are neither prohibited nor impeded from providing banking services to customers of any class or type, as permitted by law or regulations,\u201d<\/em> the document emphasises.<\/p>\n<\/blockquote>\n<p>In January 2023, Signature Bank severed ties with Binance\u2019s international business. On February 10 it emerged that <span data-descr=\"New York State Department of Financial Services\" class=\"old_tooltip\">NYDFS<\/span> initiated an investigation into the exchange\u2019s stablecoin issuer partner, BUSD. Later the regulator ordered Paxos to cease issuing them. Also, media reported that the <span data-descr=\"U.S. Securities and Exchange Commission\" class=\"old_tooltip\">SEC<\/span> was prepared to sue the infrastructure company.<\/p>\n<p>Earlier Bloomberg reported that the DOJ\u2019s fraud unit is investigating Silvergate\u2019s deals with the FTX platform and the related hedge fund Alameda Research.<\/p>\n<p>For the quarter October\u2013December 2022 the bank posted a loss of $1.05 billion. The deteriorating operating environment was triggered by the collapse of Sam Bankman-Fried\u2019s exchange, which was a client of the bank.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Fed, FDIC, and OCC issued a joint statement reminding U.S. banking institutions of the potential risks posed by crypto-focused firms.<\/p>\n","protected":false},"author":1,"featured_media":74620,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1229,1249,36],"class_list":["post-74619","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-banks-and-fintech","tag-federal-reserve-system","tag-regulation"],"aioseo_notices":[],"amp_enabled":true,"views":"17","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/74619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=74619"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/74619\/revisions"}],"predecessor-version":[{"id":74621,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/74619\/revisions\/74621"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/74620"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=74619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=74619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=74619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}