Fitch Ratings has cautioned U.S. banks that significant exposure to digital assets, especially Bitcoin, could lead to credit rating downgrades if risk isolation measures are inadequate. The report notes that while blockchain technology can offer new revenue streams, the associated volatility and compliance challenges may outweigh these benefits. Additionally, Fitch expressed concerns about stablecoins potentially undermining bank liquidity and posing systemic risks through mass redemptions and treasury bond sell-offs. Despite regulatory approvals for limited digital asset holdings, Fitch stressed that concentrated exposures could result in credit model deductions, highlighting the balance between innovation and risk management in banking.