The statement reminds banking organizations to apply existing risk management principles when dealing with liquidity risks from crypto market vulnerabilities.
In a joint statement released by three United States federal agencies, the banking sector was advised against creating new risk management principles to counter liquidity risks resulting from crypto-asset market vulnerabilities.
The joint statement highlighted the key liquidity risks associated with crypto-assets and related participants for banking organizations. The risks highlighted concern the unpredictable scale and timing of deposit inflows and outflows. The federal agencies specifically highlighted two instances to showcase the liquidity risks associated with cryptocurrencies:
“Such deposits can be susceptible to large and rapid outflows stemming from, for example, unanticipated stablecoin redemptions or dislocations in crypto-asset markets.”
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