Menu
Banking Exchange Magazine Logo
Menu

Banks Seek to Reassure After Crypto Turmoil

FTX filed for bankruptcy last week, but the OCC says US banks were largely unaffected

  • |
  • Written by  Banking Exchange staff
Banks Seek to Reassure After Crypto Turmoil

US banks were largely unaffected by the collapse of cryptocurrency trading platform FTX, according to the Office for the Comptroller of the Currency (OCC).

Speaking to the Senate Committee on Banking, Housing and Urban Affairs this week, acting comptroller Michael Hsu said its “careful and cautious” approach to crypto assets meant that the risk of contagion to the federal banking system from such events was mitigated.

In written evidence to the committee, Hsu highlighted a recent interpretive letter issued by the OCC that “establishes guardrails to clarify that the institutions we supervise should not engage in certain crypto activities unless they demonstrate that the activities can be performed in a safe, sound, and fair manner”.

“This approach has proven to be prudent following the Terra stablecoin collapse in May and more recently with the bankruptcy of FTX,” Hsu stated. “Despite contagion across cryptocurrencies and several crypto platforms, the federally regulated banking system has, for the most part, been largely unaffected.”

FTX, one of the biggest cryptocurrency exchanges, filed for bankruptcy last week, triggering significant falls in the price of Bitcoin, Ether, and other cryptocurrencies. The Securities Commission of The Bahamas, where FTX is headquartered, is investigating the circumstances of the collapse in collaboration with other regulators, it said this week.

FTX’s US arm was issued with a cease-and-desist letter by the Federal Deposit Insurance Corporation in August, along with four other crypto firms, over “false and misleading statements” that the corporation said suggested investors were federally insured.

New York-based Signature Bank issued a statement this week confirming that, while it had a “deposit relationship” with FTX, this only accounted for less than 0.1% of total deposits. It does not perform any other services for cryptocurrencies, the bank stated.

President and CEO Joseph DePaolo said: “Signature Bank is a well-diversified institution that employs appropriate risk management strategies that help us navigate the current challenging digital asset landscape. Our strong capital, solid earnings and overall diversification, continues to provide a source of strength for our depositor clients.”

Payment connectivity company Plaid has suspended FTX’s access to user data, meaning the platform cannot access its customers’ bank accounts to take payments.

back to top

Sections

About Us

Connect With Us

Resources

Technology is rapidly changing the way accountants perform and manage month-end activities. Spreadsheets, email, and shared drives no longer should slow us down. Automation generally supercharges any process and brings its value to the forefront. To get to the next level of closing, automation is a must so that repetitive, predictable, and laborious tasks can be automated.

Join us as we present a "sneak peek" into SkyStem's month-end close solution – ART. In under four weeks, your team can start reaping the benefits of month-end close automation by vastly reducing spreadsheets, cut down on reconciliation work, speed up the month-end close, and better manage your remote team.

Some results our customers have enjoyed include:

REGISTER NOW!

This webinar is brought to you by:
skystem logo