The Marriner S. Eccles Federal Reserve building in Washington, D.C., on July 6, 2022.

The Marriner S. Eccles Federal Reserve building in Washington, D.C., on July 6, 2022. (Al Drago/Bloomberg)

The top U.S. bank regulators issued a fresh warning to lenders about the risks associated with delving into crypto.

The Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency on Tuesday detailed several concerns with the volatile asset class. Officials said in a statement that it was important that risks that can't be controlled aren't allowed to "migrate to the banking system."

"The events of the past year have been marked by significant volatility and the exposure of vulnerabilities in the crypto-asset sector," the agencies said.

The warning follows a particularly fraught period for crypto. The collapse in November of the FTX exchange has left customers around the world facing the potential of billions of dollars in losses.

Federal watchdogs have insisted that the impact on the broader financial system from FTX's implosion was minimal. However, it has kindled calls for American regulators to do more to prevent further calamities.

"It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system," the regulators said.

The watchdogs said they would continue "to take a careful and cautious approach related to current or proposed crypto-asset-related activities and exposures at each banking organization."

Some of the risks that the regulators identified include:

• Fraud and scams.

• Legal uncertainties around custody.

• Misleading statements by crypto firms.

• Contagion within the crypto sector.

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