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The Federal Reserve Bank of Atlanta Raises Warning on Risks of Blockchain and Cryptocurrencies
The Federal Reserve Bank of Atlanta has issued a warning regarding the risks associated with blockchain and cryptocurrencies. The bank advised banks and financial service providers to exercise caution when dealing with cryptos.
Guidance for Banking Organizations and Service Providers
According to a statement released by the Atlanta Fed, banking organizations and their service providers should have systems in place to identify, monitor, and control risks associated with cryptocurrencies.
- Identify, monitor, and control risks
- Assure the soundness and safety of credit unions and banks
- Manage risk introduced by new partnerships
The Fed’s Novel Actions Supervision Program
The Fed also stressed that banks with complex payment systems, crypto activity, or blockchain should adhere to the Fed’s new Novel Actions Supervision Program, which aims to enhance the Fed’s supervision of activities related to crypto-assets and distributed ledger technology conducted by bank organizations.
Increasing Use of Cryptocurrencies in Illicit Activities
The warning comes as cryptocurrencies are being used for organized crime. According to a report by Immunefi, around $127 million worth of cryptos went into the hands of hackers and fraudsters across 19 specific incidents in January 2024 alone, which marks a 6x increase from January 2023. This is a cause for concern, as it indicates a growing trend of cryptocurrencies being used for illegal activities.
Warnings and Alerts in the Metro Atlanta Area
In December, police in metro Atlanta issued an urgent warning after receiving numerous reports about cryptocurrency scams targeting residents. There were also reports of pump-and-dump schemes aimed at inflating the price of cryptocurrencies, leading to fraudulent activities.
Georgia Secretary of State previously issued an investor alert, cautioning about investment ads related to cryptocurrency investment and business opportunities, urging investors to be wary of potential fraud.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
