The U.S. Banking industry regulator has warned banks about the risks posed in cryptocurrencies. The regulator stated that approval from the necessary authorities should be obtained when interacting with crypto firms in the banking sector.
The U.S. Currency Supervisory Office, which addresses the ups and downs of the crypto money market in 2022, underlined that the Semiannual Risk Perspective for Fall 2022 report published on December 8 mentions many risks that crypto money has.
However, the U.S. Office of Currency Supervision listed three concerns for the three cryptocurrency industries as the disappearance of the fixed value of stablecoins, the lack of mature risk management practices of the cryptocurrency industry, and the very high risk of contamination due to the interdependence of digital assets.
The OCC also raised issues related to financial stability. According to the OCC, the lack of regulatory clarity in the cryptocurrency industry poses a major problem. The Currency Supervision Office has additionally drawn attention to the instability of the range of firms offering crypto and token products in the market.
OCC cited the collapse and depreciation of the TerraClassicUSD (USTC) algorithmic stablecoin in May 2022 as examples of risks in crypto.
"Hacks and outages occur very often in the cryptocurrency industry. Scams are free..."
The Currency Supervisory Office stated that banks with plans related to crypto money or crypto money firms should talk to the audit offices before taking any action with the firms.
After the collapse of the FTX, many crypto companies have been using a number of transparency strategies to regain investors' trust. Crypto money exchanges have started to offer data publicly according to their transparency strategies.