Fitch Ratings warned on Monday that U.S. banks with significant exposure to cryptocurrencies and digital assets are facing rising risks, even as regulatory conditions in the country show signs of improvement.
According to Fitch, greater involvement in the crypto sector may expand banks’ product offerings, but it also heightens reputational, liquidity, operational, and compliance risks — even in lower-risk services such as trust and custody.
The agency also highlighted potential systemic risks stemming from the growing adoption of stablecoins. If stablecoin usage expands to a level that affects Treasury markets, it could introduce new vulnerabilities into the financial system.
Volatility remains a major concern. Fitch noted that price swings in leading cryptocurrencies such as Bitcoin and Ethereum continue to far exceed those seen in traditional financial markets.
Banks can increase their exposure through crypto-linked clients or by allowing wealth management customers to invest in digital assets. However, concrete data on U.S. bank exposure remains limited. The issue gained renewed attention in 2023 following the collapse of Silvergate Capital, a key banking partner for the crypto industry.
Despite these concerns, Fitch acknowledged that U.S. regulators have recently shifted toward a more supportive stance on digital assets after years of caution under the Biden administration. This change is primarily driven by two major legislative efforts under the Donald Trump administration: the GENIUS Act and the CLARITY Act.
The GENIUS Act — already passed by Congress — establishes a regulatory framework for stablecoins, requiring full 1:1 backing with U.S. dollars and Treasuries. The CLARITY Act, still awaiting approval, aims to create formal oversight for digital exchanges and brokerage platforms.
Optimism around pro-crypto regulation helped fuel a strong market rally earlier this year, pushing Bitcoin above $120,000. But the momentum faded over the past two months as several flash crashes reduced investor appetite. Concerns over the long-term viability of Bitcoin-treasury firms, particularly MSTR, also weighed on sentiment, while inflows into crypto ETFs slowed dramatically.
