US Federal Agencies Outline Crypto Custody Risks for Banks
Three US federal agencies have issued guidance on the crypto custody risks banks may encounter when offering digital asset services. The joint document, titled ‘Crypto-Asset Safekeeping by Banking Organizations,’ emphasizes the need for financial institutions to thoroughly understand crypto assets, address potential liabilities from lost assets, and comply with the Bank Secrecy Act and Anti-Money Laundering regulations.
Understanding the Risks
- Banks must evaluate the technical complexity of crypto assets
- Institutions face potential liability if client assets are lost or compromised
- Compliance with existing financial regulations remains mandatory
Third-Party Custodian Relationships
Many institutions partner with specialized providers like Coinbase and Anchorage for custody services. However, banks retain ultimate responsibility for their sub-custodians’ activities.
Evolving Regulatory Landscape
Recent changes by the Federal Reserve have reduced barriers to crypto adoption. Meanwhile, crypto-native firms like Ripple and Circle are pursuing banking licenses, signaling convergence between traditional and digital finance.
