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The Office of the Inspector General of the Federal Deposit Insurance Corporation released a report on the FDIC\u2019s crypto risk strategies Wednesday.\u00a0<\/p>\n
The Office of the Inspector General made two recommendations to the FDIC, including a process for supervising crypto activities at regulated institutions.<\/p>\n
According to a press release, the OIG made the recommendations \u201cbased on evidence obtained during [their] evaluation.\u201d It said \u201cthe FDIC\u2019s lack of clear procedures causes uncertainty for supervised institutions in determining the appropriate actions to take.\u201d<\/p>\n
The OIG recommends<\/a> that the FDIC needs to assess the potential risks of crypto because, without \u201ceffective guidance,\u201d the FDIC or the institutions under its umbrella \u201cmay not take appropriate actions to address the most significant risks posed by crypto assets.\u201d<\/p>\n \u201cSpecifically, the FDIC<\/a> has not yet completed a risk assessment to determine whether the Agency can sufficiently address crypto asset-related risks through actions such as issuing guidance to supervised institutions,\u201d the report said.<\/p>\n Further, the OIG warned that a lack of review process could make it seem as though the supervisory body is not being \u201csupportive\u201d of institutions currently engaging or planning to engage with crypto.<\/p>\n The FDIC agreed with the report\u2019s recommendations and \u201cplans to complete corrective actions for these recommendations\u201d by the end of January.<\/p>\n The report also calls out crypto companies making \u201cmisrepresentations\u201d about deposits being backed by the FDIC. As an example, it referred to an unnamed crypto company.<\/p>\n \u201cIn 2022, a cryptocurrency company filed for bankruptcy<\/a>. This company had been misrepresenting to its customers for over a year that the funds it held for customers were insured by the FDIC,\u201d the report said.<\/p>\n While there were a number of crypto companies that declared bankruptcy in 2022, the Federal Trade Commission most recently targeted bankrupt lender Voyager<\/a> for its deceptive claims around FDIC insurance.\u00a0<\/p>\n The company was allegedly \u201cwell aware\u201d that the deposits were not backed by the FDIC, according to a FTC suit.<\/p>\n Additionally, Binance updated its terms of service to say that accounts<\/a> are \u201cnot eligible\u201d for insurance protections after it said \u2014 in an email to customers and seen by Blockworks \u2014 that it had been given \u201cguidance\u201d by the FDIC.<\/p>\n Don\u2019t miss the next big story \u2013 join our\u00a0free daily newsletter<\/a>.<\/strong><\/p>\n
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