Global Banking Regulators Approve Framework for Banks to Disclose Crypto Exposure

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Sujha Sundararajan

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Sujha Sundararajan

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July 4, 2024 03:30 EDT

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The Basel Committee on Banking Supervision, comprising of several global banking regulators, have approved frameworks for banks to disclose their crypto exposure, starting January 2026.

The finalized disclosure framework by the committee includes a “standardized set of public tables and templates covering banks’ crypto exposures,” official statement revealed.

According to the committee, banks disclosing their crypto exposure would help “enhance information availability and support market discipline.”

“The framework will be published later this month, with an implementation date of 1 January 2026.”

The Basel committee originally indicated crypto disclosures to arrive by January 2025, however, extended the deadline to another year.

Additionally, Basel Committee also discussed the prudential implications of tokenized deposits and stablecoins on capital. Given the current market developments, risks from such products “are broadly captured by the Basel Framework.”

“The Committee will continue to monitor this area and other developments in the crypto asset markets.”

Disclosure of Crypto Exposures

In January, the Independent Community Bankers of America (ICBA) noted that increasingly some cryptocurrency exposures are controlled by exchanges. They either specialize in providing liquidity for a cryptocurrency product or have a vested interest a particular crypto asset.

ICBA, then said that it supports the work of the Basel Committee to create a framework of crypto asset disclosures.

“[The framework] thoroughly covers the critical elements needed for full disclosure of the bank’s exposure and explains how such exposure impacts the financial statements of the organization.”

The global banking regulators’ move comes at a time when crypto exposures have not yet found wide entry into the banking system.

The Basel Committee said last October that banks should disclose “quantitative information on crypto exposures” and liquidity requirements.

This means that banks should disclose with a focus on the business activities including assets owned directly, trading in customer accounts, equity investments in exchanges and any crypto contracts issued by the bank.