Three federal agencies of the United States government highlighted the risks banks face when considering custodying crypto for clients. They outlined potential liabilities, legal responsibilities, and the need for resources to understand the complex asset class. Banks may find the guidance helpful as they navigate the evolving crypto space.

Financial institutions often use third parties for crypto custody, like BNY Mellon and BlackRock with Coinbase. The document emphasizes that banks are accountable for sub-custodian activities, which could be crucial if crypto assets are compromised. Audit programs are key to address crypto asset nuances and ensure proper controls and expertise.

There are signs that banks are warming up to crypto, with some in early talks to issue a joint stablecoin. The regulatory environment appears more favorable, with the removal of “reputational risk” criteria by the Federal Reserve. Some native crypto companies are even seeking banking licenses to expand their services and offerings.

Read more at Cointelegraph: US Federal Agencies Outline Key Risks for Banks Eyeing Crypto Custody