US Federal Bank Regulatory Agencies issue Advisory to Banks: Deposit Liquidity Risks from Crypto Asset Entities

The US federal bank regulatory agencies issued a joint advisory to banks about the liquidity risks associated with taking deposits from crypto asset entities that are for the benefit of those entities’ customers.  The advisory warned that such deposits may not be stable during periods of market volatility in the crypto sector.  The regulators also warned about the stability of deposits that constitute stable-coin related reserves.  This is a continuation of what has been a steady stream of cautionary guidance from the regulators over the past 2+ years about the risks associated with banking crypto businesses, or offering crypto-related products. 

A copy of the joint release is available at the following link:  Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities (federalreserve.gov).