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US Government Agencies Warn of Crypto Activities – Crypto News Aktuell in English

The crypto space received more regulatory attention by the end of 2022. The collapse of one of the largest global digital asset exchanges brought massive losses to the industry. This event prompted several watchdogs to raise concerns and warnings against the use of cryptocurrencies to release.

Some US regulators have recently commented on the risks of crypto activities. Watchdogs include the Federal Reserve, the Federal Deposit Insurance Corp, and the Office of the Comptroller of the Currency (OFOC).

According to the report on Tuesday, January 3, 2023, some officials from the three regulators warned lenders against exposure to digital assets. They argued that escalating risks should not extend to the banking system.

Regulators cited risks associated with crypto exposure

The watchdogs’ warning comes after the FTX digital asset exchange collapsed in 2022. Millions of customers have lost their funds on the ailing platform, estimated at more than $8 billion.

From their observations, US regulators cited the high volatility and vulnerabilities seen in the cryptocurrency space over the past year. They stressed the importance of adequately safeguarding the banking system. This ensures that the risks in the crypto space cannot spread to banks.

Also, regulators highlighted some risks from the involvement of digital assets in banking systems. These include scams, scams, regulatory uncertainties in custody of digital assets, platform vulnerabilities, ambiguous statements from companies, crypto contagions, and others.

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As supervisors of the banking system, the watchdogs pledged their undivided regulatory due diligence. This means increased caution and stricter rules for banks when it comes to digital presence.

The FTX bust led to further doubts

Before its implosion, FTX was one of the top crypto exchanges in the world. It had millions of users and investors from different sectors.

Due to the bankruptcy, several people and companies exposed to the platform suffered huge losses. These outplays sparked concerns and reactions both inside and outside the digital space. As a result, US regulators have tightened their regulations on digital activities.

As can be seen from the bankruptcy filing, Signature Bank and Silvergate are some small banks exposed to the exchange. But the two banks reported that they had only a minimal portion of the total deposits on the troubled exchange.

According to US regulators, the broader financial system was less affected by the collapse of the FTX exchange. But the impact is still devastating for some individuals and companies that have invested in the platform.

Therefore, the US watchdogs come up with regulatory measures to avert future events in the financial sector.

Source: Crypto News Deutsch

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