- The Basel Committee has proposed a standardized format for major banks to disclose their holdings of crypto assets.
- The proposal is set to be implemented in January 2025, aiming to provide investors with a complete picture of banks’ crypto asset holdings.
- The Basel Committee and the European Central Bank both highlight the significant risks associated with crypto assets.
The Basel Committee of Banking, regulated by the world’s main financial centers, proposed a standardized format for major banks to disclose their holdings of crypto assets. The proposal would be implemented in January 2025.
Reuters reported that the global banking regulators announced on October 17 that if major banks disclosed their crypto asset holdings, it would give a complete picture to investors. Moreover, the proposal would support “market discipline.”
The Basel Committee agreed on new rules in December 2022 that clarify how much capital banks should hold to cover different types of crypto assets. The committee shared, “The consultation is based on the disclosure requirements contained in the final prudential standard on the treatment of bank’s crypto asset exposures published in December 2022.”
The Committee claimed that the use of the templates by the banks would “support the exercise of market discipline and help to reduce information asymmetry amongst banks and market participants.”
The proposed template would help assess whether the crypto assets that the banks hold comply with the crypto asset classification conditions. Furthermore, the template will include standardized disclosures relating to liquidity requirements.
The Committee issued a previous statement in which it shared that the growth of crypto assets could raise financial stability concerns and increase the risks faced by the banks. They said:
Certain crypto assets have exhibited a high degree of volatility and present risks for banks, including liquidity risk, credit risk, market risk, operational risk (including fraud and cyber risks), money laundering, and terrorist financing.
Furthermore, the European Central Bank stated on February 15, 2023, that crypto assets are subject to significant risk and “boom-and-bust” cycles. They claimed that crypto assets weren’t used widely in mainstream banking operations and added that “most banks under ECB supervision have so far largely stayed away from crypto assets.”
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