Basel committee proposes full disclosure of banks’ cryptocurrency holdings
In a report released on Thursday, the Committee outlined its perspective on what it referred to as the ‘most noteworthy system-wide banking stress’ since the 2008 financial crisis, with cryptocurrency being targeted.
According to recently proposed plans of the Basel Committee on Banking Supervision, which establishes standards for traditional finance institutions, banks will be required to fully disclose their cryptocurrency holdings. This move comes as international regulators attribute some banking collapses to the rapid rise in the popularity of cryptocurrencies.
The Committee had previously recommended that banks should allocate sufficient capital to account for their holdings of unsupported cryptocurrencies like bitcoin (BTC) or ether (ETH). The new disclosure obligations for banks’ crypto-asset exposure will complement the existing capital requirements for digital assets.
In a report released on Thursday, the Committee outlined its perspective on what it referred to as the ‘most noteworthy system-wide banking stress’ since the 2008 financial crisis, with cryptocurrency being targeted. The surge in popularity of cryptocurrency was identified as one of three underlying trends indirectly contributing to the financial disruption in traditional finance that occurred in March, along with the expansion of non-bank financial intermediation and the emergence of faster digital payment systems enabling rapid depositor withdrawals.
About the Basel Committee on Banking Supervision
The Basel Committee on Banking Supervision is an international committee of banking supervisory authorities established by the central bank governors of the Group of Ten countries in 1974. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. The committee frames guidelines and standards in different areas – some of the better known among them are the international standards on capital adequacy, the Core Principles for Effective Banking Supervision and the Concordat on cross-border banking supervision. The committee is made up of central banks and other banking regulatory authorities from 28 jurisdictions and has 45 members.
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