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About the risks of crypto assets US agencies warn banks

The crypto assets sector was dealt a deadly blow in 2022. We have witnessed everything, from the failure of the greatest and most coveted enterprises to fraud on one of the major exchanges. Although adoption has slowed somewhat, many organisations remain enthusiastic about cryptocurrencies. Because of this, US government organisations including the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have warned banks about the dangers of cryptocurrencies.

US agencies give advice to banks working with crypto

The FDIC and OCC assert that banks are legally permitted to offer banking services to cryptocurrency firms, but they are currently determining the best course of action to allow cryptocurrency-related operations at the company. The authorities added that they are approaching cryptocurrency cautiously and safely in light of the risks involved with it and the failure of several crypto-asset enterprises.

Banks should be mindful of fraud, scams, uncertainty, and other cryptocurrency-related issues, they added. The goal is to prevent the financial system from becoming exposed to the dangers connected with the cryptocurrency business. In reality, owning crypto assets on a public, open, or decentralised network is dangerous in the eyes of the government.

So, in order to prevent fraud and scams, the banks must establish sufficient risk management, regulations, and monitoring before entering the cryptocurrency market and offering services.

It’s good for crypto

Even while we would believe that agencies prohibiting or preventing banks from engaging in cryptocurrency is a bad thing, the truth is very different. The reason why everyone wants to be a part of cryptocurrency will be gone if Wall Street and the government attempt to control it in the same manner they do with every other asset market.

It’s critical to realise that using crypto can help you escape centralised authority and government surveillance. Therefore, the sector will benefit overall from banks leaving if they do.

Why are crypto assets high risk?

Technical and cybersecurity issues: Online wallet providers and exchanges, as well as other platforms utilised for crypto assets, are vulnerable to cybersecurity threats and hacking, putting your money at risk.

What is the biggest risk with cryptocurrency?

Access may be denied or lost if this is stolen, lost, or compromised. Even though it is unusual, bitcoins can be kept in physical wallets so that they can be used without a computer. However, this comes with the same hazards that are present with other forms of physical cash: they might be misplaced, lost, or accidentally destroyed.

Also Read: Data indicates Bitcoin mining is not so decentralised

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