Fitch Warns of Potential Downgrade of US Banks with High Crypto Exposure, Highlights Systemic Risks of Stablecoin Expansion

International rating agency Fitch Ratings has warned that if US banks have a "significant and concentrated" exposure in the crypto sector, their business models or risk profiles may be negatively reassessed. Fitch noted that crypto integration can enhance costs, yields, and efficiency, but also bring reputation, liquidity, operational, and compliance risks.

Fitch stated that while stablecoin issuance, deposit tokenization, and blockchain technology can improve services and enhance payment efficiency, banks still need to properly address challenges such as crypto price volatility, blockchain anonymity, and asset security. Failure to manage risks adequately could lead to a downgrade in ratings, resulting in higher financing costs, decreased investor confidence, and impact on institutional development.

The report also mentioned that several large banks have ventured into crypto-related businesses, including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo. Meanwhile, Fitch specifically warned of the potential systemic impact of stablecoins, believing that if their scale expands enough to affect the US Treasury market, it will bring additional financial stability risks.

Another rating agency, Moody's, previously pointed out that widespread adoption of stablecoins could weaken the US dollar's monetary transmission mechanism, creating pressures similar to "informal dollarization," and increasing regulatory challenges due to more opaque blockchain settlements.

Related Articles