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Banks Must Disclose Crypto Exposures, Global Regulator Says
The guidance will ensure transparency and market discipline, the Basel Committee on Banking Supervision said
Updated Apr 9, 2024, 11:01 p.m. Published Oct 17, 2023, 10:42 a.m.
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Banks must disclose quantitative and qualitative information on their crypto activities, according to draft guidance published by international standard-setter the Basel Committee on Banking Supervision on Tuesday.
The plans add to the hefty capital requirements already imposed by the committee to discourage banks from holding unbacked crypto such as bitcoin and ether following turmoil affecting crypto-linked lenders such as Signature Bank and Silicon Valley Bank.
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Under the proposals, which would take effect in 2025, “banks would be required to disclose qualitative information on their activities related to cryptoassets and quantitative information on exposures to cryptoassets and the related capital and liquidity requirements,” said the committee, which is linked to the Bank for International Settlements, a network of central banks based in Basel, Switzerland.
“A common format for disclosures will support the exercise of market discipline and help to reduce information asymmetry between banks and market participants,” it added.
The plans were trailed two weeks ago by the committee, which sets norms for traditional-finance lenders designed to avoid a repeat of the 2008 financial crisis, and are open for consultation until January 2024.
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Regulation, derivatives helping drive TradFi institutions into crypto, panellists say
Non-participation in decentralized finance is becoming a career risk for traditional finance professionals, panellists said.
What to know:
- Major financial institutions are expanding into crypto derivatives as clearer U.S. regulation helps make digital assets a mainstream portfolio allocation.
- New products such as overnight rate futures, multitoken indexes and access to DeFi liquidity are enabling institutional investors to move beyond bitcoin into broader crypto exposure and arbitrage strategies.
- Futures and other derivatives, underpinned by a robust industrywide beta benchmark, will channel trillions of dollars of institutional capital into crypto, making non-participation a growing career risk for traditional finance professionals, panellists said.
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