Earlier this week, The Wall Street Journal wrote, "Federal Reserve, FDIC and OCC Warn Banks About Cryptocurrency Risks," which explained, "​A group of powerful bank regulators on Tuesday highlighted what they said were a litany of risks stemming from cryptocurrencies and expressed skepticism that the assets can be safely held by the financial institutions they oversee. The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said that recent failures of major crypto firms led them to exercise caution in reviewing banks' proposals to engage with the market. They highlighted fraud and scams, market volatility, legal uncertainty, and weak risk-​management and governance practices at crypto firms, among other things, as reasons for concern." The regulators' release, entitled, "Agencies issue joint statement on crypto-​asset risks to banking organizations," states, "Federal bank regulatory agencies today issued a statement highlighting key risks for banking organizations associated with crypto-​assets and the crypto-​asset sector and describing the agencies' approaches to supervision in this area. In particular, the statement describes several key risks associated with crypto-​assets and the crypto-​asset sector, as demonstrated by the significant volatility and vulnerabilities over the past year.... The agencies continue to assess whether or how current and proposed crypto-​asset-​related activities by banking organizations can be conducted in a manner that is safe and sound, legally permissible, and in compliance with applicable laws and regulations, including those designed to protect consumers. The agencies will continue to closely monitor crypto-​asset-​related exposures of banking organizations, and, as warranted, will issue additional statements related to engagement by banking organizations in crypto-​asset related activities." The Journal'​s piece adds, "They also warned of the susceptibility of so-​called stablecoins -- cryptocurrencies backed by supposedly safe, dollar-​denominated assets -- to potential runs by spooked investors. `​Such events could cause sudden deposit outflows for banks that hold cash reserves for stablecoin issuers. The second-​largest stablecoin issuer, Circle Internet Financial Ltd., said recently that it had more than $​11 billion in cash held at banks including Silvergate, Bank of New York Mellon Corp., Citizens Trust Bank and Customers Bank."

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