Feb 26, 2023
Fed, FDIC & OCC Warn Banks of Crypto-Asset Market Risks
The Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) recently released a joint statement warning banks against creating new risk management principles to counter the potential liquidity risks associated with crypto-assets. The statement also reminded banks to apply existing risk management principles when dealing with crypto-related liquidity risks.
The statement highlighted the unpredictability of deposit inflows and outflows as one of the key liquidity risks associated with crypto-assets. It pointed to two instances that could cause large and rapid outflows: deposits placed by a crypto-asset-related entity for the benefit of the crypto-asset-related entity’s customers, and deposits that constitute stablecoin-related reserves.
The agencies noted that banks are neither prohibited nor discouraged from providing banking services related to crypto-assets, but they should actively monitor the liquidity risks and establish and maintain effective risk management and controls over crypto offerings. To this end, they recommended four key practices for effective risk management: performing robust due diligence and monitoring of crypto assets, incorporating the liquidity risks, assessing interconnectedness between crypto offerings, and understanding the direct and indirect drivers of the potential behavior of deposits.
The statement also highlighted the possibility of changing crypto regulations, with references to the agencies’ “case-by-case approaches to date.”
The warning from the federal agencies comes at a time when the web3 space is becoming increasingly popular. NFTs, or non-fungible tokens, are gaining traction as a new way to promote and sell digital assets. As a result, more and more businesses are turning to NFT marketing agencies to help them reach their target audiences.
The most popular form of NFT marketing is through Twitter. Twitter NFT marketing campaigns allow businesses to promote their NFTs to a wide range of users and potential buyers. However, as with any form of marketing, it is important to understand the risks associated with it and to have a strategy in place to mitigate them.
For businesses looking to launch an NFT marketing campaign, it is important to work with a web3 agency that understands the risks associated with the web3 space and has the expertise to create an effective NFT marketing strategy. The agency should also be familiar with the regulations and laws in the crypto space, as well as the liquidity risks associated with selling NFTs.
The warning from the federal agencies serves as a reminder to banks and businesses to be aware of the risks associated with crypto-assets and to take the necessary steps to mitigate them.
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