Banks’ crypto exposure should be disclosed – BIS Basel Committee

The Basel Committee on Banking Supervision (BIS) of the Bank for International Settlements issued a consultation paper on October 17, proposing to make it mandatory for banks to disclose crypto exposure.

The Basel Committee is made up of central banks and financial authorities from 28 jurisdictions and is a forum for regulatory cooperation on banking supervision issues. The final advisory paper is based on the final prudential guidance on how banks should handle exposure to crypto assets released in December 2022.

The consultation paper aims to develop a standardized “statement table and set of templates for banks' crypto-asset exposure” with a proposed implementation date of January 1, 2025. The Basel Committee has opened the proposal for public comment until January 31. , 2024, after which the results will be published on the website.

Under the new proposed regulations, banks will be required to provide quantitative information regarding exposure to crypto assets and related capital and liquidity requirements. Banks are required to provide quality information on their activities related to cryptocurrencies.

Banks will also be required to provide information on accounting classifications regarding their exposure to crypto assets and liabilities. The committee suggested that using a uniform disclosure format would promote market discipline and reduce information asymmetry between banks and market participants.

Related: Ripple Joins BIS Cross-Border Payments Task Force

The committee reviewed crypto assets and banking exposure in June. At the time, the committee did not delve into the topic, only focusing on permissionless blockchains and noting the eligibility criteria for “Group 1” stablecoins.

BIS has been actively involved in crypto consultations and research into the regulatory landscape of decentralized technology. Recently, the BIS and a few European central banks published proposals for a system to monitor global currency flows.

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