FDIC's Crypto Asset Risk Strategy Assessed by OIG; Mitigation Steps Planned for 2024
Summary:
The Office of the Inspector General (OIG) at the Federal Deposit Insurance Corporation (FDIC) has released an evaluation report regarding the corporation's risk management strategy towards crypto assets. The approach, adopted in 2022, aims at understanding crypto-related activities of supervised institutions and providing industry guidance. However, the OIG pointed out the FDIC’s failure to assess the risks' significance and potential impact, as well as the absence of clear feedback procedures. The OIG made two suggestions, which the FDIC plans to address by January 2024.
The Office of the Inspector General (OIG) belonging to the Federal Deposit Insurance Corporation (FDIC), an autonomous U.S. government entity ensuring deposit safeguards for commercial and savings banks, has issued an assessment report pertaining to the corporation's strategy for managing crypto asset risk. An edited version of this report is now available to the public. The FDIC opted for a risk associated with crypto approach from the ground up at the start of 2022, according to the OIG. This involved understanding the crypto-related activities of supervised organizations, giving individualized supervisory input, and delivering industry-wide advice in coordination with other agencies. In order to comprehend the crypto undertakings of these institutions, the FDIC dispatched a letter posing related questions. As of early 2023, the FDIC had received crypto interest or activity details from 96 institutions. The number of institutions that received feedback from the FDIC is undisclosed, with some advised to hold off any crypto-based activity until the FDIC had finalized its appraisal.
The OIG revealed that while the FDIC began developing strategies comprehending risks affiliated with crypto assets, the efforts remained unfinished: specifically, the FDIC’s failure to evaluate the significance and potential impact of the risks. The FDIC, the OIG asserted, should document their risk analyses, appraise their significance, and form mitigation plans, including guidelines. Furthermore, the procedure for delivering feedback in reaction to its letter was hazy, with neither a concrete review timeline nor a definitive end to the process. The OIG made a pair of propositions to settle these matters.
The OIG deemed its suggestions as not crucial, highlighting that the FDIC had already agreed with the advice given and aimed to implement corrective measures by January 2024. Inspector generals were established within U.S. federal agencies back in 1978 to conduct independent audits, appraisals, and inquiries.
Published At
10/18/2023 9:10:00 PM
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