Digital assets are now a regular topic in the boardrooms of banks and credit unions. While fintech platforms have moved quickly to lead the market in technical innovation, traditional financial institutions (FIs) remain singularly valuable to their customers through established consumer protections and identity frameworks.
For Chief Risk Officers (CROs) at traditional financial institutions, the challenge is applying established guidance to a novel asset class and payment rail. Successful digital asset offerings require breaking through siloed operations to understand from first-principles the nuanced and product-specific risks associated with the technology.
For a traditional FI breaking into digital assets, success requires careful judgment on two risk surfaces: both in the specific product (the “what”) and the third-party partner (the “who”).
The novel nature of both the products and the partners means a generic vendor risk spreadsheet is insufficient. A “check-the-box” approach creates dangerous blind spots by overlooking technical and regulatory nuances. This is true across use cases, whether a FI is facilitating the buying and/or selling of assets, offering digital custody, or issuing stablecoins.
Initial critical steps for Chief Risk Officers include not only selecting a product roadmap or a partner, but also engaging the right internal stakeholders and translating the initiative for the Board of Directors.
Assembling a Cross-Functional Group
CROs must resist the urge to treat this as a technology problem owned solely by IT. Digital assets sit at the intersection of infrastructure, regulation, finance, customer experience, and strategic positioning. This means pulling together representatives from technology, legal, compliance, finance, treasury, product, and risk, and critically, ensuring the group shares a mandate not just to evaluate but to learn together.
In a rare moment of banking levity, several FIs have branded these ‘DAWGs’ (Digital Asset Working Groups), an acronym you’re welcome to adopt.
There is a hurdle with this, though, which is employees’ time. Taking time from key members’ day-to-day jobs and burdening them with a new task is not an ideal scenario. Most banks work through this in three succinct and simple ways:
- Time-boxing the commitment. Rather than standing up an indefinite working group, effective institutions define a clear horizon (typically 60 to 90 days) with a specific deliverable. This gives your staff a finish line and allows managers to plan around other commitments
- Right-sizing participation. Not every function needs a full-time seat at the table. Many banks structure tiered involvement, where a small core group carries the primary research and synthesis workload while a broader set of stakeholders are engaged episodically for input, review, and validation.
- Getting hands-on the technology directly. One of the most effective ways to accelerate the working group’s learning curve without consuming enormous amounts of time or costs is to create structured opportunities for members to actually experience digital assets firsthand. This might mean executing or observing a small transaction on a public network or working through a sandbox environment offered by a vendor or core banking partner.
Once the working group is structured and functioning, the CRO’s attention must turn to one of the most consequential — and most commonly mishandled — responsibilities in this process: how digital assets get presented to the board.
From Boardroom Anxiety to Informed Oversight
The second priority is shaping how digital asset conversations reach the Board of Directors, which requires discipline around sequencing and specificity. The CRO’s role is to deliver information in deliberate layers: beginning with level-setting on the underlying technology — what it is, how it works, where it is and isn’t mature — before progressing toward the organization’s specific product or service decisions. From my experience, this is best executed in hands-on activities that compare traditional banking activities with digital asset functions. This can include:
- Showing your board what a distributed ledger looks like in banking, potentially through demos offered by a vendor or core banking partner.
- Creating a digital asset wallet or sending a digital asset payment from start to finish, compared to how a potential customer opens up a deposit account or sends a payment in banking.
- Promoting a tabletop exercise that discusses some of the major news narratives around digital assets, with similar experiences that have occurred with other payment means.
The goal is not to make board members into experts, but to give them enough grounded, product-specific context that governance conversations move from vague anxiety or unchecked enthusiasm into productive, risk-informed decision-making.
Regulators do not expect zero risk. They expect exposures to be identified, documented, and actively managed. Institutions that approach this with disciplined, product-specific analysis are far more likely to withstand regulatory scrutiny and build a sustainable, successful program.
Author: Ben Hailey, Head of Risk and Compliance, Stablecore