BIS’s Basel Committee published an advisory requiring banks to disclose cryptocurrency risk. These proposed regulations are currently open for comments. If approved by the competent authorities, it will enter into force as of January 1, 2025.
BIS wants banks to disclose cryptocurrency risks
The Basel Committee on Banking Supervision of the Bank for International Settlements (BIS) published a consultation paper on October 17 proposing to make it mandatory for banks to disclose crypto risks. The Basel Committee consists of central banks and financial authorities from 28 countries. It also serves as a forum for regulatory cooperation on banking supervision matters. The latest consultation document is based on disclosure guidelines in the final prudential standard on how banks should treat their exposure to cryptocurrency risks published in December 2022.
The consultation document aims to set out a standard “set of disclosure tables and templates for banks’ cryptocurrency exposures.” It points to January 1, 2025 as the transition date for this application. The Basel Committee will open the proposal to public comment until January 31, 2024. After this date, the results will be published on the website.
What steps will banks have to take?
Under the proposed new regulations, banks will be required to report cryptocurrency risks. They will also be required to provide quantitative data on capital and liquidity requirements corresponding to these risks. Banks will also be required to provide qualitative data on their cryptocurrency-related activities. Additionally, banks will be required to submit information on the accounting classifications of their exposure to crypto assets and liabilities.
In its proposal, the committee says using a uniform disclosure format would promote market discipline. It also claims that it will reduce information asymmetry between banks and market participants.
BIS continues its investigations in the field of cryptocurrency
The committee also reviewed cryptocurrency holdings and banks’ risks in June. At that time, the committee did not delve into the issue in depth. He noted that he was only focusing on eligibility criteria for permissionless blockchains and “Group 1” stablecoins. By the way, it is worth noting that BIS actively participates in cryptocurrency consultations. It also examines the regulatory aspect of decentralized technology. Recently, the BIS and a handful of European central banks published details of a concept to develop a system for tracking international crypto flows.
These developments are very important for the crypto world. Because, with the acceptance of traditional finance, it also encourages corporate adoption. krIptokoin.comAs you follow from , more and more corporate companies are entering this field.
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