Only a couple of smaller banks have significant exposure to cryptos, and their shares have collapsed.

By Wolf Richter for WOLF STREET.

Following a series of bankruptcies of crypto companies, and following the total collapse of some stablecoins, and following the general collapse of crypto prices, and following revelations of all kinds of imaginable and previously unimaginable shenanigans, scams, and frauds in the entire crypto and DeFi space, the US banking regulators today issued a warning to banks about the crypto and DeFi space, amid fears of contagion to the banking sector.

So far, crypto has been like a giant videogame where nothing is really illegal because it’s just a videogame, and where players are having lots of fun clicking on buttons and watching flashing screens while scamming and defrauding each other, a videogame where people in the end lose all their money if they don’t get out in time. And no big deal because it’s just a videogame, with no real consequences on the economy, other than a profuse waste of energy, because there is nothing crypto is actually needed for outside of the videogame.

But contagion spreading from the beloved and fun crypto videogame to the despicable fractional-reserve fiat banking system could be a real mess.

So the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency (OCC) – the three banking regulators in the US – issued a joint-warning today to banks, with a laundry list of “key…