By: Isha Das
The United States Federal Deposit Insurance Corporation (FDIC), has been extensively criticized for leaving its member banks unable to meet the agency's crypto standards. This resulted from a recent report conducted by the FDIC's inspector general, which revealed considerable voids in its crypto guidelines. Consequently, the institution has pledged a comprehensive course correction by January 2024.
The audit unfolded concerns about the regulator's shortcomings in handling the potential risks linked with the fluctuating crypto asset sector. Volatility in market capitalization as it climbed to $3 trillion in November 2021, and then dropped to $1.2 trillion in April 2023, emphasized complications revolving around liquidity, market valuation, and aspects of consumer safety that the FDIC needs to tackle effectively.
The regulator was also found lacking a decisive process of engaging its member banks about their crypto-related operations. A failure to communicate fittingly found the FDIC requesting certain institutions to terminate their crypto activities between 2022 and 2023 without any clarifications.
As a resolution, the auditor recommended that the FDIC should outline a plan with fixed schedules to handle the risks related to crypto activities and also refine the supervisory feedback process connected to the review of these activities. To address these issues, the FDIC has consented to these suggestions and set a January 2024 deadline for their execution.
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