Welcome back to The Breakdown with me, NLW.

It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.

What's going on, guys? It is Wednesday, August 16th, and today we are once again talking about a day that shows on the one hand regulatory challenges, and on the other hand, the crypto industry just keeping chugging forward. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord.

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Hello, friends.

So as I said, today is a day of contrasts, which really I think sums up the moment that we are

in in crypto right now. Let's start on what could be interpreted as the

negative side with a new set of FDIC warnings. The Federal Deposit Insurance Corporation, the FDIC,

has added crypto as one of the five most important categories of risk to the banking sector

in this year's annual review. The FDIC report reflected on last year's calamities within the crypto industry

and said the agency was prepared to engage in, quote, robust supervisory discussions with the banks

it oversees in relation to crypto. Now, for completeness, the other four risks to the banking

sector were credit risks, market risks, operational risk, and climate-related financial risk,

but obviously we are concerned mostly with the crypto

risk here. The FDIC noted that it has, quote, generally been aware of some banks' interest in

crypto-asset-related activities through its normal supervision process. However, as that interest has

escalated, the agency has desired to better understand the risks that crypto could impose on banks.

In their accounting, the FDIC

included a long list of potential risks, including fraud, legal uncertainties, misleading or

inaccurate representations and disclosures, risk management practices, exhibiting a lack of maturity

and robustness, and platform and other operational vulnerabilities. End quote.

In addition, the report highlighted contagion risk due to the close interconnections

...