US Treasury’s OCC Says Crypto’s ‘Interconnectedness’ Is a Problem

The independent bureau within the US Treasury Department is asking financial institutions to tread carefully when dealing with crypto and related firms

article-image

Deacons docs/Shutterstock.com modified by Blockworks

share

Extended dislocations in crypto markets and ensuing failures of major players should put banks on notice, according to a unit of the US Treasury. 

In its semiannual Risk Perspective report, the Treasury’s Office of the Comptroller of the Currency (OCC) said Thursday that it continues to take a cautious approach to cryptoassets.

The OCC pointed toward several “key risks” financial institutions should keep in mind — including a lack of adherence to best risk management practices and the potential for additional contagion. 

“The events of this year in the crypto industry have revealed a high degree of interconnectedness between certain crypto participants through a variety of opaque lending and investing arrangements,” the OCC said.

The regulator also advised national banks and federal savings associations interested in engaging in digital assets to first discuss the activities with regulators. 

David Gan, founder and partner at venture capital firm OP Crypto, told Blockworks it’s important to distinguish between the centralized crypto industry — highlighted by the OCC — and a decentralized one.

“While centralized entities have continued to show weakness and a lack of maturity in terms of regulatory stability, decentralized entities have continued to work as intended,” Gan said.

Still, while digital assets share some risks with traditional asset classes, additional pitfalls may show up in new ways, the OCC said.

Stablecoins were also a focus of the regulator’s caution, which it said were susceptible to bank run risks — as seen with Terra’s failed algorithmic UST experiment in May. 

At the time, the OCC’s acting director Michael Hsu called UST a “wake-up call,” before acknowledging no contagion had hit the banking system as a result of UST’s depegging.

This time around though, the OCC’s assessment sat at odds with its director’s view earlier this year.

“The market stresses revealed that crypto participants may be engaging in highly leveraged trading, in addition to providing brokerage, custody, and exchange-like services to customers,”  the OCC said. “The result is a high risk of contagion among connected parties.”

Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens