The US Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have issued a joint warning to banks of the potential dangers posed by cryptocurrencies.

The regulators noted the potential for fraud and scams, deceptive representations and disclosures, market volatility, stablecoins, and contagion risks.

They further cautioned that holding or issuing crypto assets on a decentralized network is not compatible with sound banking practices, but that banks should not be discouraged from offering such services if allowed by law.

This warning follows the collapse of Bahamas-based in November 2022, which was then followed by evidence of inadequate disclosure and reports of misused funds.