Key takeaways:
- The FDIC’s OIG released an assessment report on the FDIC’s approach to managing the risk associated with crypto.
- The FDIC sent a letter to institutions inquiring about their crypto operations to better understand them.
An assessment report on the Federal Deposit Insurance Corporation’s (FDIC) approach to managing the risk associated with cryptocurrency has been released by the Inspector General’s Office (OIG) of the FDIC, an independent US government agency that insures deposits for savings and commercial banks. The report has been made public with certain redactions.
Early in 2022, the FDIC took a “bottom-up” stance on cryptocurrency risk, according to the OIG. This strategy entails comprehending the crypto-related operations of supervised institutions, offering supervisory input on an individual basis, and offering more general industry “guidance on an interagency basis.”
The FDIC sent a letter to institutions inquiring about their crypto operations to better understand them. Ninety-six institutions had expressed interest in using cryptocurrency to fund their operations as of January 2023.
The FDIC withheld input from a certain number of institutions. Some had been told to hold off on anything linked to cryptocurrencies until the FDIC had completed its review, but that figure was also concealed.
The FDIC began to formulate strategies addressing the risks connected with cryptocurrency assets; however, the efforts were insufficient, according to the OIG:
“However, the Agency has not assessed the significance and potential impact of the risks. Specifically, the FDIC has not yet completed a risk assessment to determine whether the Agency can sufficiently address crypto-asset-related risks through actions such as issuing guidance to supervised institutions.”
The OIG asserts that the FDIC should record its risk assessments, evaluate their importance, and create mitigating measures like guidelines. Furthermore, it was unclear how to reply to its letter with feedback.
The OIG stated that the procedure or review period has no set end date. To address those circumstances, the OIG offered two suggestions.
The OIG deemed its suggestions to be of no consequence. It stated that by the end of January 2024, the FDIC intended to have finished the necessary actions, having previously agreed with the suggestions.
In 1978, inspector generals were first appointed to US federal agencies. They offer unbiased assessments, audits, and inquiries.
