Alternative Market Briefing

Basel Committee finalizes disclosure standards for banks' cryptoasset exposures

Thursday, July 18, 2024

Matthias Knab, Opalesque:

The Basel Committee on Banking Supervision has released its final standard on the disclosure of banks' cryptoasset exposures, set to be implemented by January 1, 2026. This move represents a significant step in bringing transparency and standardization to the rapidly evolving world of cryptoassets in banking.

Key Points of the New Standard:

Comprehensive Disclosure Framework: The standard introduces a structured approach to disclosing cryptoasset activities, including qualitative descriptions of business activities, risk management strategies, and the bank's approach to classifying cryptoassets.

Detailed Quantitative Reporting: Banks will be required to provide detailed information on their cryptoasset exposures, including exposure amounts, risk-weighted assets, and capital requirements across different cryptoasset categories (Group 1a, 1b, 2a, and 2b).

Materiality Threshold: The Committee has introduced a two-stage materiality threshold for reporting Group 2 cryptoasset exposures, ensuring that significant exposures are properly disclosed without overburdening banks with minimal involvement.

Daily Average Reporting: To prevent potential window-dressing, banks must report average daily values for certain Group 2 cryptoasset exposures, in addition to period-end values.

Accounting and Liquidity Disclosures: The standard also requires banks to disclose the accounting classification of their cryptoasse......................

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