Top banking regulators in the U.S. recently sent a new warning to banks, telling them that some of their assets could become risky and that they should be on the lookout for any liquidity risks from clients who use crypto currencies.
In a statement released on Thursday by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, they said that banks should have good tools to keep an eye on the money that crypto asset-related organisations deposit. The agencies cautioned that stablecoin assets and bank transactions made on crypto currency users’ behalf could experience sudden outflows.
Regulators said that “recent events” in the bitcoin market that showed the risks of volatility led to the new statement. They stressed that the statement doesn’t add any new rules and doesn’t stop banks from working with certain industries. However, it is the latest in a series of moves by bank officials to warn people to be careful with any bitcoin transactions.
This is the first time bank officials have called attention to assets tied to stablecoins. Stablecoins are a type of cryptocurrency that is usually tied to the dollar and tends to change when the market is unstable. Asset-backed stablecoins like Tether and USD Coin are well known. This means that the stablecoin issuer has assets, like bank accounts, that can be quickly cashed to meet payment requests.
But if regulators are worried about the safety of these assets, banks may not want to work with stablecoin businesses anymore. For example, in the event of unplanned stablecoin redemptions or unstable markets, the statement warned that large and sudden withdrawals could happen from stablecoin accounts.
Read More Articles : Drake avoids deposition in XXXTentacion murder case
