FDIC crypto risk assessment process insufficient: Inspector General

FDIC crypto risk assessment process insufficient: Inspector General

The FDIC's crypto risk assessment process was evaluated by the Inspector General's Office (IG), which found it to be insufficient. The IG released a report on the FDIC's crypto risk strategy, stating that it was inadequate. The FDIC is an independent US government agency that provides deposit insurance to commercial and savings banks. FDIC crypto risk assessment process insufficient: Inspector General.

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IG Finds FDIC’s Report Inadequate

The Inspector General (IG) is responsible for overseeing the performance of the Federal Deposit Insurance Corporation (FDIC). In its report, the IG expressed concerns about the FDIC's readiness to handle the potential risks associated with crypto assets. The lack of clear guidance from the FDIC has created uncertainty for banks about how to appropriately manage crypto-related risks. While the FDIC has started developing strategies to address these risks, the IG notes that the process is still lacking, as stated in a redacted version of the report.

“However, the Agency has not assessed the significance and potential impact of the risks. Specifically, the FDIC 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.”

The Inspector General has recommended solutions to address the FDIC's concerns. The FDIC should document its risk assessments, evaluate their importance, and develop mitigation strategies based on them. The IG also criticized the Corporation's process for providing feedback on a letter about an institution's crypto activities, citing the lack of a review timeline. The FDIC has agreed to comply with the IG's recommendations and plans to resolve the issues by January 2024.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.