On July 14, 2021, Anchorage Digital Bank, a cryptocurrency bank based in Anchorage, Alaska, received a consent order from the U.S. Office of the Comptroller of the Currency (OCC). This order requires Anchorage Digital Bank to take specific actions to address certain deficiencies in its risk management program.
Background
Anchorage Digital Bank was founded in 2017 and became the first federally chartered digital asset bank in the United States in January 2021. The bank offers a variety of services related to cryptocurrencies, including custody, trading, and lending.
In May 2021, the OCC conducted an examination of Anchorage Digital Bank’s risk management program. The examination revealed deficiencies in the bank’s program related to risk identification, risk assessment, and internal controls.
The Consent Order
The OCC’s consent order requires Anchorage Digital Bank to take several actions to address the deficiencies identified during the examination. These actions include:
- Developing and implementing a comprehensive risk management program
- Establishing an independent risk management function
- Ensuring that the bank’s board of directors is adequately informed about the bank’s risk management program
- Conducting an independent review of the bank’s risk management program
The consent order also requires Anchorage Digital Bank to submit a written plan to the OCC within 60 days outlining how it will comply with the order’s requirements.
Implications
The OCC’s consent order is a significant development for Anchorage Digital Bank and the broader cryptocurrency industry. It underscores the importance of effective risk management in the cryptocurrency space and highlights the OCC’s role in regulating digital asset banks.
The order also serves as a reminder to other cryptocurrency companies that they must adhere to the same regulatory standards as traditional financial institutions. As the cryptocurrency industry continues to grow and mature, regulatory scrutiny is likely to increase.
Response from Anchorage Digital Bank
In a statement released on July 15, 2021, Anchorage Digital Bank acknowledged the OCC’s consent order and stated that it is committed to addressing the deficiencies identified during the examination. The bank also emphasized its commitment to providing secure and compliant digital asset services to its clients.
Conclusion
The OCC’s consent order is a significant development for Anchorage Digital Bank and the cryptocurrency industry as a whole. It highlights the importance of effective risk management in the digital asset space and underscores the need for regulatory compliance.
As the cryptocurrency industry continues to evolve, it is likely that we will see more regulatory action aimed at ensuring that companies in the space adhere to the same standards as traditional financial institutions. Anchorage Digital Bank’s response to the consent order suggests that the bank is taking these issues seriously and is committed to addressing them in a timely and effective manner.