(Reuters) – Banks that accept deposits from cryptocurrency companies should be aware of increased liquidity risks, particularly if firms are highly interconnected with other digital asset businesses, said Michael Barr, the Federal Reserve’s vice chair of supervision, on Wednesday.
Barr said the Fed is working with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp to warn that banks could experience deposit fluctuations linked to broader crypto market developments.
“The recent volatility in crypto markets has demonstrated the extent of centralization and interconnectedness among crypto-asset companies, which contributes to amplified stress,” he said.
“While banks were not directly exposed to losses from these events, these episodes have highlighted potential risks for banking organizations.”
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(Reporting by Hannah Lang in Washington; Editing by Lisa Shumaker)
