Banks: capital rules for crypto assets by the end of 2022

Hugh Jones

LONDON (Reuters) – The Basel Committee, in charge of international banking regulation coordination, will finalize “hard” rules before the end of the year on provisions imposed on banks to cover possible losses related to cryptoassets, its main supervisory body announced on Tuesday.

The committee, which brings together regulators from the world’s major financial centers, proposed last year a gradual approach that includes very strict rules for providing “unsecured” crypto assets, such as bitcoin, which are considered the most risky.

Thus, banks may need to hold capital at least equal to their exposure to this type of asset in order to be able to cover the total depreciation without being hit.

On the other hand, the committee’s approach is more flexible for “stable coins”, crypto assets backed by traditional assets such as major international currencies.

But the collapse of the dollar-pegged TerraUSD in May could have challenged this approach, calling into question the perceived stability of this asset class.

“With regard to crypto assets, members reaffirmed the importance of developing a robust and sound regulatory framework for banks’ exposure to crypto assets that promotes responsible innovation while maintaining financial stability,” explains the Group of Central Bank Governors and Banking Supervisors (GHOS) in a press release. .

“GHOS directed a committee to finalize such a framework around the end of the year.”

GHOS also “unanimously” called on all member countries to quickly and fully implement the latest part of Basel III, a set of rules set in the wake of the global financial crisis of the late 2000s.

“The resumption of inflation in many jurisdictions, combined with a worsening macroeconomic outlook and tightening financial conditions, could expose accumulated weaknesses in the financial system,” GHOS warned in a press release.

He added that more than two-thirds of the Basel Committee member countries plan to fully implement Basel II by the end of 2024.

The European Union and the UK, members of the Basel Committee and GHOS, have announced plans to introduce new rules by early 2025, but the EU has proposed several changes.

(Reporting by Hugh Jones, French version by Marc Angrand, edited by Nicolas Delame)

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