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Banks must reveal their cryptocurrency exposure, according to the Basel Committee of the BIS.
The Basel Committee on Banking Supervision of the Bank for International Settlements (BIS) issued a consultation paper on Oct. 17, suggesting that banks should be mandated to reveal their crypto exposure.
This committee consists of central banks and financial authorities from 28 jurisdictions and serves as a platform for regulatory collaboration on banking supervision issues. The recent consultation paper is grounded in the disclosure guidelines outlined in the final prudential standard regarding how banks should manage their exposure to crypto assets, which was published in December 2022.
The purpose 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 Jan. 1, 2025. The Basel Committee has invited public feedback on the proposal until Jan. 31, 2024, after which the findings will be made available on its website.
According to the new proposed regulations, banks would be obligated to present quantitative data concerning their exposures to crypto assets along with the associated capital and liquidity requirements. Furthermore, banks would need to provide qualitative information regarding their activities related to cryptocurrencies.
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Moreover, banks would be required to disclose details about the accounting classifications of their exposure to crypto assets and liabilities. In its proposal, the committee asserted that employing a standardized disclosure format would promote market discipline and reduce information asymmetry between banks and market participants.
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The committee also assessed crypto assets and bank exposure in June. At that time, the committee did not explore the subject in depth, only noting its focus on permissionless blockchains and the eligibility criteria for “Group 1” stablecoins.
The BIS has been actively engaged in discussions regarding crypto and evaluating the regulatory implications of decentralized technology. Recently, the BIS, along with several European central banks, released details of a concept aimed at developing a system to monitor international cryptocurrency flows.
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