Basel Committee to Consider Disclosure Requirements for Banks’ Crypto Assets

Fallout continues from the banking crisis earlier this year when the Basel Committee on Banking Supervision considered requiring banks to disclose their crypto holdings. The committee, which operates under the auspices of the Bank for International Settlements, identified crypto holdings as one of the reasons behind the collapse of several banks in March.

At its October 4–5 meeting, the committee considered the causes of the failure of Silicon Valley Bank, Signature Bank of New York, and First Republic Bank, and the subsequent failure of Credit Suisse. His competitor UBS.

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According to the committee's report, three structural trends may have indirectly contributed to bank failures: the increasing role of intervention by banks in recent years, the accumulation of crypto assets in a small number of banks, and the increasing digitization of customers' ability to move their money quickly.

The report also looked at policy issues in detail.

The report specifically highlighted the role of crypto in the failure of Signature Bank. The committee found:

SBNY's significant client base puts it in a critical position when digital asset companies hit the “crypto winter” of 2022. […] SBNY's poor governance and inadequate risk management practices left the bank unable to effectively manage its liquidity in times of stress.

The signature was closed by the New York State Department of Financial Services on 12. The regulators said at the time that crypto was not behind the decision.

The discussion does not reflect proposed reforms to the Basel framework, the report said. In January, the committee revised the framework to limit the crypto assets in bank reserves to 2%.

At its meeting on October 4-5, the #BaselCommittee agreed to consult on cryptoasset and climate disclosures, approved the annual G-SIB review and published its report on the banking crisis in early 2023 #BaselIII #FinancialRegulation pic.twitter.com/aSRw7YYHP7

— Bank for International Settlements (@BIS_org) October 5, 2023

A statement attached to the report said a consultation paper on crypto asset exposure will be published soon.

This is just the latest iteration of the banks' tough days in March. The US Federal Reserve Bank and the Federal Deposit Insurance Corporation (FDIC) published their conclusions in April, with the FDIC taking another view in August.

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