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Banks’ exposure to cryptocurrencies ought to be declared – Basel Committee of the BIS

The proposed regulations are currently open to public comments, and if sanctioned, they are slated to take effect by January 1, 2025.

On October 17, the Basel Committee on Banking Supervision, a part of the Bank for International Settlements (BIS), released a consultation paper suggesting the mandatory disclosure of banks’ exposure to crypto assets. This committee, comprised of central banks and financial authorities from 28 jurisdictions, serves as a platform for collaborative regulatory efforts in banking supervision. The recent consultation paper draws from the disclosure guidelines outlined in the final prudential standard on managing banks’ exposure to crypto assets, published in December 2022. The objective of the consultation paper is to establish a standardized “disclosure table and set of templates for banks’ crypto-asset exposures,” with a proposed implementation date of January 1, 2025. The Basel Committee has invited public comments on this proposal until January 31, 2024, with the results set to be made available on its official website. Under the newly proposed regulations, banks would be mandated to furnish quantitative data on their exposure to crypto assets, including corresponding capital and liquidity requirements. Additionally, banks would be obligated to provide qualitative data on their activities related to cryptocurrencies. The proposal also stipulates that banks must disclose information regarding the accounting classifications of their exposure to crypto assets and liabilities. The committee argues in its proposal that the use of a uniform disclosure format will promote the application of market discipline and reduce information asymmetry between banks and market participants.

In a previous review in June, the committee examined crypto assets and bank exposure. However, it only briefly touched on the subject, focusing on permissionless blockchains and the eligibility criteria for “Group 1” stablecoins. The BIS has been actively engaged in crypto consultations and exploring the regulatory dimensions of decentralized technology. Recently, the BIS, in collaboration with several European central banks, shared details of a concept aimed at developing a system to track the international flows of cryptocurrencies.

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