Fitch: May downgrade US bank rating with high crypto exposure, warns of systemic risks in stablecoin expansion.

According to Odaily Planet Daily, international rating agency Fitch Ratings stated that if US banks have "significant and concentrated" exposure to the crypto space, their business model or risk profile could be negatively reassessed. Fitch pointed out that while crypto integration can improve fees, yields, and efficiency, it also brings reputational, liquidity, operational, and compliance risks.

Fitch stated that while stablecoin issuance, deposit tokenization, and on-chain technology can improve services and increase payment efficiency, banks still need to properly address challenges such as cryptocurrency price volatility, on-chain anonymity, and asset security. If risks are not adequately managed, a rating downgrade will lead to increased funding costs, decreased investor confidence, and negatively impact institutional development.

The report also noted that several major banks have ventured into crypto-related businesses, including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo. At the same time, Fitch specifically warned of the potential systemic impact of stablecoins, arguing that if their scale expands to the point of affecting the US Treasury market, it will pose additional financial stability risks.

Another rating agency, Moody's, has also previously pointed out that the large-scale adoption of stablecoins could weaken the dollar's monetary transmission mechanism, creating pressure similar to "informal dollarization," and increasing regulatory difficulty due to less transparent on-chain settlements. (Cointelegraph)