Crypto Risk Assessment Process – FDIC Guidelines

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Now, let’s reimagine the provided text:

The evaluation report on the corporation’s crypto asset risk strategy was uncovered by the Inspector General’s Office (OIG) of the Federal Deposit Insurance Corporation (FDIC), an autonomous United States government entity safeguarding deposits in commercial and savings banks. This redacted report, made available to the public, delves into the sufficiency of the bank deposit insurer’s risk mitigation measures.

In the early months of 2022, the FDIC embraced a novel “bottom up” approach to tackling crypto risk, according to the OIG. This strategy involves comprehending the crypto-related endeavors of supervised institutions, delivering tailored supervisory feedback, and furnishing extensive industry counsel on an interagency scale.

To grasp the intricacies of institutions’ crypto pursuits, the FDIC dispatched inquiries. As of January 2023, 96 institutions signaled their interest or shared current crypto-related activities. However, the number of institutions receiving feedback remains concealed, much like those advised to temporarily halt crypto activities pending FDIC assessments.

The OIG’s scrutiny revealed that the FDIC initiated the development of strategies concerning crypto asset risks, but the endeavor was incomplete. Specifically, the agency fell short in evaluating the significance and potential impact of these risks. A comprehensive risk assessment, a prerequisite for determining if the agency can adequately address crypto-related risks, is yet to materialize.

According to the OIG, the FDIC ought to meticulously document its risk assessments, evaluate their significance, and formulate mitigation strategies, such as issuing guidance. Furthermore, the process for providing feedback in response to the FDIC’s inquiries lacks clarity. There’s no defined timeframe for reviews, and the process seems to lack a clear endpoint, as per the OIG’s observation. The OIG proposed two recommendations to rectify these intricacies.

Interestingly, the OIG categorized its recommendations as non-significant, highlighting that the FDIC had already concurred with the suggestions. The FDIC has outlined plans to complete corrective actions by the close of January 2024. It’s worth noting that inspector generals were instituted in U.S. federal agencies in 1978, ushering in an era of independent audits, evaluations, and investigations.