Regulators warn U.S. banks on crypto risks including ‘fraud and scams’ after FTX collapse

Regulators warn U.S. banks on crypto risks including ‘fraud and scams’ after FTX collapse


Ether has hugely outperformed bitcoin since both cryptocurrencies formed a bottom in June 2022. Ether’s superior gains have come as investors anticipate a major upgrade to the ethereum blockchain called “the merge.”

Yuriko Nakao | Getty Images

U.S. banking regulators warned financial institutions on Tuesday that dealing with cryptocurrency exposes them to an array of risks, including scams and fraud.

“The events of the past year have been marked by significant volatility and the exposure of vulnerabilities in the crypto-asset sector,” the regulators said in a joint statement from the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency. The comments come just weeks after the spectacular collapse of crypto exchange FTX.

related investing news

Barclays downgrades Ally Financial, says the bank is more vulnerable in 2023

CNBC Pro

The regulators said the risks include: “fraud and scams among crypto-asset sector participants” and “contagion risk within the crypto-asset sector resulting from interconnections among certain crypto-asset participants.”

During the crypto boom, when financial players seemed to announce a new crypto partnership on a weekly basis, bank executives said they needed further guidance from regulators before dealing more directly with bitcoin and other cryptocurrencies in retail and institutional trading businesses.

Now, about two months after the bankruptcy filing of FTX, the industry has been exposed as rife with poor risk management, interconnected risks and outright fraud.

While the statement indicated that regulators were still assessing how banks could adopt crypto while adhering to their various mandates for consumer protection and anti-money laundering, they seemed to give a clue as to which direction they were headed.

“Based on the agencies’ current understanding and experience to date, the agencies believe that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices,” the regulators said.

They also said that they have “significant safety and soundness concerns” with banks that focus on crypto clients or that have “concentrated exposures” to the sector.

Traditional banks have largely sidestepped the crypto meltdown, unlike the 2008 financial crisis in which they played a central role. One exception has been Silvergate Capital, whose shares have been battered in the past year.



Source

American Eagle shares rise on retailer’s Travis Kelce partnership
Business

American Eagle shares rise on retailer’s Travis Kelce partnership

American Eagle launches AE x Tru Kolors by Travis Kelce. Courtesy: American Eagle Shares of American Eagle rose Wednesday morning after the apparel company announced a collaboration with football star Travis Kelce, just a day after he proposed to singer Taylor Swift. The stock was up roughly 5% in early trading. Kelce’s sportswear brand, Tru […]

Read More
Cracker Barrel shares rise after restaurant chain gets rid of controversial new logo
Business

Cracker Barrel shares rise after restaurant chain gets rid of controversial new logo

A Cracker Barrel sign featuring the old logo is seen outside of a restaurant on August 21, 2025 in Homestead, Florida. Joe Raedle | Getty Images Shares of Cracker Barrel Old Country Store rose 3% Wednesday after the restaurant chain said it would scrap its new logo and return to the original one, amid mounting […]

Read More
An indicator of commercial real estate transaction volume just improved for the first time this year
Business

An indicator of commercial real estate transaction volume just improved for the first time this year

Housing block in Warsaw, Poland Busà Photography | Moment | Getty Images A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public […]

Read More