The U.S. Federal Deposit Insurance Corporation (FDIC) pointed out in its annual risk report that the risks posed by cryptocurrencies are escalating, and encrypted businesses pose novel and complex risks that are difficult to assess amid the recent volatility.
The growth of crypto assets in the last year corresponds with more banks expressing interest in crypto activity. Yet the industry then experienced a meltdown that exposed vulnerabilities.
The FDIC is closely monitoring banks’ cryptocurrency activities and said it may provide additional guidance.
Part of the difficulty in assessing these risks stems from the dynamic nature of crypto assets, crypto markets, and the rapid pace of innovation, the report said.
Some of the major risks associated with cryptoassets and cryptoasset industry participants include those related to fraud, legal uncertainty, misleading or inaccurate statements and disclosures, lack of maturity and robustness in risk management practices, and platform and other operational vulnerabilities risks of.