It’s no secret that not every government is equally comfortable with the cryptocurrency world. The traditional banking system is often even more skeptical about the emerging industry. In fact, according to a study by the US bank insurer, the crypto industry poses a major risk to the traditional US banking system.
There are many risks for US banks
The Federal Deposit Insurance Corporation (FDIC) is the American version of the Dutch deposit insurance system. This institute is a kind of insurance company to which banks regularly pay commissions to insure account holders.
In addition, the FDIC also monitors the health of the banking system. An annual research report outlines the top risks facing the US banking system today. The 92-page report lists a plethora of risks ranging from commercial real estate to a lack of growth for smaller businesses.
The FDIC also warns of a slowing economy, reduced profits for banks and, of course, for the many banks already considered vulnerable. Earlier this year, several major banks went bankrupt, after which the FDIC came to the rescue. However, earlier this year many more banks were at risk and the FDIC recognizes this. Nevertheless, the industry is said to be in pretty good shape at the moment.
Is crypto a risk for banks?
Additionally, the FDIC has its own section devoted to cryptocurrencies. In general, companies that trade crypto with third parties simply have a bank account, just like regular businesses. However, the banks are not always satisfied with this and fear that these companies pose a great risk.
This is evident not only from the opinion of the FDIC, but also from the fact that British banks refused their customers to transfer funds to crypto companies earlier in the year. But the crypto industry is very complicated and banks find it difficult to estimate how great the risks actually are.
According to the institute, there are doubts about how well crypto companies protect consumers. This could have an impact on the banking sector. Stablecoins are also a problem as some stablecoins use bank deposits as collateral.