Cryptocurrencies are under fire from regulators again

U.S. regulators are warning banks of heightened liquidity risk in cryptocurrency-related deposits. Concern, even fear, has arisen in the crypto industry with speculation that US regulators could cut off crypto companies from the banking system - a potential death blow that would limit investors' ability to exchange assets such as bitcoins for dollars.

Cryptocurrencies (again) in the crosshairs of US regulators

A trio of regulators, incl Federal Reserve, warns banks to be wary of cryptocurrency liquidity risks, in a recent move by US officials to limit the economy's vulnerability to a turbulent market. Fed, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. said in a joint statement that banks should apply effective risk management for deposits linked to crypto entities. These include robust due diligence and monitoring of crypto entities that set up depository accounts, as well as considering the potential volatility of these deposits in routine stress testing.

Regulatory crackdown on cryptocurrencies – driven in part by November collapse of the FTX exchange – has made some banks afraid to do business with this sector. The latest statement comes after a January warning in which they stated that certain types of cryptocurrency activities “highly likely to be incompatible with safe and sound banking practices”.

The IMF is joining the action

He released his statement yesterday International Monetary Fund. Executive Council of the International Monetary Fund (MFW extension) called on member states on Thursday not to allocate cryptocurrency assets "status of official currency or legal tender". The Recommendation is part of a framework of nine elements to develop a "comprehensive, coherent and coordinated policy response" to the challenges and concerns of this market.

The authority also suggests establishing legal certainty, developing oversight requirements for all cryptocurrency market participants, and strengthening global cooperation to create alternative solutions in cross-border payments and finance.

“By adopting the framework, policy makers can better mitigate the risks associated with cryptocurrency assets while capitalizing on the potential benefits of technological innovations associated with them.” - we read in the statement.

Bitcoin and the company, however, do not react decisively at the moment. This week, BTC/USD is down 3,5% and ETH/USD is down 2,9%, which is not an above-average move perhaps, until then.