The Federal Deposit Insurance Corporation, tasked with supervising financial institutions, needs to do more work to assess risks in the cryptocurrency industry, according to a new report.
Volatility in the crypto market over the years highlights risks could affect financial institutions, and ultimately the FDIC's mission, according to a report released Wednesday by the Office of the Inspector General. The office, which oversees the FDIC, also made a few recommendations.
"We determined that the FDIC has started to develop and implement strategies that address the risks posed by crypto assets. However, the Agency has not assessed the significance and potential impact of the risks," the report said.
The FDIC was thrust into the spotlight earlier this year after the collapse of multiple banks linked to crypto and tech. Lawmakers pressed FDIC Chair Martin Gruenberg in March over the agency's handling of the fallout of Signature Bank and Silicon Valley Bank. Other regulators have notably said they did not see crypto play a role in either bank failure.
The Inspector General's report said the FDIC had not yet finished a risk assessment to figure out whether the agency "can sufficiently address crypto-asset related risks through actions such as issuing guidance to supervised institutions."
The FDIC's process for providing feedback also needs some work, they said. The FDIC asked certain financial institutions to provide information on their crypto-related activities and then asked them to pause those activities without giving a timeframe.
The Office of the Inspector General said the FDIC should establish a plan with time frames in order to assess risks for crypto-related activities. It alsosaid the agency should update and clarify its supervisory feedback process on its review of institutions' crypto-related activities.
The FDIC agreed and plans to meet those needs by Jan. 30, according to the report.
The Office of the Inspector General for the FDIC is an independent office that conducts audits and other reviews of the agency's program.
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