(Bloomberg) -- Regulators at the Federal Reserve have a blunt warning for banks looking to take advantage of new opportunities that involve cryptocurrencies: make sure they’re legal first.
The central bank on Tuesday released a supervisory letter that recommended steps that lenders overseen by the Fed should take before getting involved in the digital-asset industry. As a starting point, the Fed said, firms should notify the regulator prior to engaging in crypto-related activities and ensure that they comply with rules.
Federal watchdogs have grown increasingly focused on making sure that crypto’s volatility doesn’t have negative impacts on the broader financial system. Meanwhile, traditional financial firms are seeking ways to grow in the fast-growing asset class.
“The emerging crypto-asset sector presents potential opportunities to banking organizations, their customers, and the overall financial system; however, crypto-asset-related activities may also pose risks related to safety and soundness, consumer protection, and financial stability,” according to the statement from Michael Gibson, director of the Fed’s division of supervision and regulation, and Eric Belsky, who leads the consumer and community affairs unit.
©2022 Bloomberg L.P.