The recent surge in digital assets has raised concerns about banks’ exposure to crypto-related risks. Last year’s banking calamity highlighted the dangers of unchecked deposits from a single industry and inadequate risk management measures.
To prevent similar meltdowns, regulators must heed two key lessons from 2023. Firstly, banks are vulnerable when they have significant deposits tied up in a single industry. This was seen at Silvergate Capital Corp., which relied on crypto companies for 98% of its deposits before liquidating its assets. Silicon Valley Bank’s failure to tech startups and venture capitalists also had severe consequences.
Secondly, regulators must address the challenge of risk management and anti-money-laundering controls. The collapse of FTX, a high-profile exchange with lax anti-money-laundering systems, was exposed in 2021 and 2022. Banks’ inability to detect suspicious transactions on time exacerbated the crisis.
To mitigate these risks, regulators should require banks to post sufficient collateral at the Federal Reserve’s discount window to cover potential withdrawals from unstable deposits. They should also streamline risk management measures, such as reducing the burden of suspicious-activity reports and raising the threshold for reporting transactions to the Treasury Department.
With stablecoins expected to reach $2 trillion in value, it’s crucial that regulators act proactively to protect the financial system. Banks, Congress, and the White House must work together to create a more resilient and regulated industry that balances growth with risk management.
Source: https://www.bloomberg.com/opinion/articles/2025-07-11/crypto-week-time-to-protect-banks