It is a well-known fact that the cryptocurrency market is risky. While many participants did not take these risks seriously enough, many problems surfaced in 2022.
Koinfinans.com As we have announced, the year 2022 terra, Celsius, Three Arrows Capital, FTX It hosted the collapse of important names such as These negative events, in addition to the negative macroeconomic outlook, increased the dominance of bears in the crypto market. The fluctuations and sharp price drops resulted in retail and institutional investors making losses and even avoiding the market.
The Federal Reserve, the Federal Deposit Insurance Agency, and the office of the Currency Controller laid out various risks associated with cryptocurrencies in one of their joint statements.
Statements Made Reminds 2022 Crypto Market
“The events of the past year have resulted in significant volatility and the emergence of security vulnerabilities in the crypto-asset industry.”
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The statement highlighted several risks regarding cryptocurrencies and their participants that banking institutions should be wary of. One of the primary risks has been the fraud risk prevalent in the cryptocurrency industry. Secondly, uncertainties regarding custody practices, redemptions and the legality of property rights were discussed.
“It is important that unmitigated or uncontrollable risks associated with the crypto-asset sector are not carried over to the banking system. Authorities oversee banking institutions that may be exposed to risks from the crypto-asset sector.”
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The statement also mentioned volatility, stablecoins, risk management and various other risks. The institutions also urged banks to ensure appropriate risk management with appropriate policies and monitoring to mitigate and identify risks. The announcement by the agencies came after several unforeseen events that occurred in 2022.