Joint Statement to Banking Organizations on Liquidity Risk from Crypto Assets

In late February, the Federal Reserve, FDIC, and OCC released a joint statement about the risks associated with using funding sources from crypto-asset-related entities as well as effective practices for managing those risks. The statement reminds banking organizations to follow existing risk management principles and does not introduce any new principles.

Certain sources of funding from crypto-asset-related entities can pose liquidity risks to banking organizations due to the unpredictability of deposit inflows and outflows, particularly deposits for end customers and stablecoin-related reserves. It is important for banking organizations to actively monitor and manage these risks by understanding the potential behavior of deposits, assessing concentration and the interconnectedness of deposits, incorporating liquidity risks into contingency planning, and performing due diligence on crypto-asset-related entities.

Banking organizations are also required to comply with applicable laws and regulations, including brokered deposit rules and filing requirements.

You can read the full statement here. Contact our Community Banking experts at The Whitlock Co. for further information.


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