Investors in cryptocurrencies have recovered from the shock of the past few weeks. The market has fallen so much that you can say with certainty that we are in a bear market. However, the US government is still holding out. Banks now need to be extra careful when investing in crypto.
Banks are vulnerable
Michael Hsu, the current head of the Office of the Comptroller of the Currency (OCC), emphasizese in a meeting and in a rapport Which the recent problems surrounding Decentralized Finance (DeFi) further strengthened its image of the market. He wants banks to be extra careful about how they invest in digital assets, even more than before.
Dat clearly indicates that the government is keeping in mind that this was not yet the bottom. The market for cryptocurrencies is the easiest target for the OCC, because the rest of the market has not had it easy either. In just six months, most major stock indices have fallen by at least 20%. Banks are immediately affected when shares fall. If they also bought a lot of cryptocurrencies, then in bigger problems it could pose risks to financial stability.
Crypto polytics correctly named
The research is quite broad and covers, among other things, the impact of climate change, the war in Ukraine and the pandemic on banks. Still, cryptocurrencies are covered extensively and the word “crypto” is used sixteen times. However, the OCC is again very careful in its use of language. ‘Cryptocurrency’ has been replaced everywhere with ‘crypto asset’. For example, the OCC does not confirm that they are currency, rather than something else.
The government is often a bit secretive about what exactly it thinks about financial markets. For example, in recent years we have often heard that ministers and other top people within the government believe that cryptocurrencies forbidden should become.
On the one hand, it competes with the government’s fiat currency, but at the same time its blockchains and also open-source tokens for the government incredibly useful† Therefore, the government is more likely to absorb it completely into the ‘old’ financial system.
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