Prudential Regulators Issue New Guidance On Crypto-Assets

On January 3, the Board of Governors of the Federal Reserve (FRB), Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) issued a Joint Statement on Crypto-Asset Risks to Banking Organizations. As predicted in our previous client alert titled FTX Bankruptcy-What Could Be Next for the Industry, the new guidance confirms that the banking regulators will use their supervisory authority over banking organizations to prevent the perceived risk of contagion in the crypto industry from spreading to the banking sector. This jointly issued guidance comes on the heels of various statements made by other regulators and the Securities and Exchange Commission (SEC) guidance to publicly traded companies, advising them to disclose their exposure to and risk in the crypto markets to investors. Going forward, we expect that regulators will continue to use their existing authorities to protect customers and avoid further market contagion.