Inspector General wants FDIC to review crypto risk assessment process, guidance

The Office of Inspector General of the Federal Deposit Insurance Corporation (FDI), an independent US government body that provides deposit insurance to commercial and savings banks, has published an assessment report on the corporation's crypto asset risk strategy. An updated version of the report has been released to the public.

The FDIC adopted a “bottom-up” approach as early as 2022, the OIG said. That approach includes understanding the crypto-related activities of supervised institutions, providing regulatory feedback on a case-by-case basis, and “providing industry-wide guidance on interagency.”

The FDIC issued a letter asking institutions to understand their crypto activities. In the year As of January 2023, 96 institutions have shown interest or offered for current activities in crypto assets. The number of institutions that received comments from the FDIC is limited. Some have been advised to pause crypto-related activity until the FDIC conducts its review, but that number has been covered.

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The OIG noted that the FDIC had begun developing strategies to address the risks associated with crypto assets, but it was incomplete:

“However, the agency has not assessed the seriousness and impact of the problem. In particular, the FDIC has yet to complete tasks such as issuing guidance to regulated institutions to determine whether the agency can adequately address crypto-asset-related risks.

According to the OIG, the FDIC must document its risk assessments, assess their significance, and develop mitigation strategies such as guidance. Moreover, the process of responding to the letter was not clear. There is no clear deadline for reviews or the process, the OIG said. The OIG made two recommendations to address these situations.

FDIC Strategies Related to Crypto-Asset Risks: The FDIC has begun developing and implementing strategies to address crypto-asset risks. It does not assess the significance and impact of risks, and the feedback process for supervised banks is unclear. 2 racks. pic.twitter.com/7rmRGYJwk3

— FDIC OIG (@FDIC_OIG) October 18, 2023

The OIG rated the recommendations as not helpful. The FDIC agreed with the recommendations and plans to complete corrective actions by the end of January 2024.

In the year In 1978, inspector generals were introduced in US federal agencies. They offer free audits, reviews and inspections.

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