Given a couple of oddities that have befallen the crypto industry in 2022, the United States Office of the Comptroller of the Currency (OCC) has warned conventional banks to be careful in delving into digital asset industry because it is yet to be matured.
— OCC (@USOCC) December 8, 2022
The U.S. banking regulator, OCC, remarked that there are emerging risks in the crypto space, and banks should not only do due diligence but also seek permission when engaging with crypto or crypto firms.
However, the agency asserted that there are lots of dislocations in the crypto market and some of the key risks were captured in its Dec. 8 Semiannual Risk Perspective for Fall 2022 report.
The firm stated that acclaimed stablecoins may be unstable because there are no mature risk management practices in the crypto space. This view may not be unconnected to the indiscriminate collapse of Terraform stablecoin (USTC).
Other major risks cited by the agency include lack of consistent and comprehensive regulation alongside extreme volatility in the crypto space.
US lawmakers examine Banks’ relation with Crypto firms
Following the FTX cryptocurrency exchange collapse, two United States Senators Elizabeth Warren and Tina Smith have urged the federal financial regulators to examine the relation between conventional banks and crypto firms.
The lawmakers directed the call to the Federal Reserve Chair, Jerome Powell, acting Comptroller of the Currency Michael Hus, and Federal Deposit Insurance Corporate acting chair Martin Gruenberg.
The duo argued that there was a possible tie between collapsed FTX and the Washington-based Moonstone Bank. Also, they stated that it appears there was a relationship between stablecoin issuer Tether and the Bahamas-based Deltec Bank.
While Warren and her colleagues have written a couple of letters requesting independent investigations into the FTX collapse, the lawmakers under the Senate Banking Committee have scheduled Dec. 14 for a hearing on the matter.
Meanwhile, the former FTX Boss Sam Bankman-Fried is hesitant in honoring the invitation. There are emerging claims that he might be served a subpoena by the committee chair Sherrod Brown.