Basel Committee on Banking Supervision seeks input on crypto-asset regulation
The Basel Committee on Banking Supervision (BCBS) has published a discussion paper on the potential regulatory treatment of crypto-assets.
“The past few years have seen rapid growth in crypto-assets,” the supervisory authority writes. “While the crypto-asset market is still small relative to the size of the global financial system, and banks’ exposures to crypto-assets are currently limited, the absolute size of the market is meaningful.”
BCBS, founded in 1974, is a major global rule-setter for the regulation of banks. It has 45 members, including central banks and bank supervisors from 28 different jurisdictions.
The paper focuses in on several risks and concerns associated with crypto-assets. These include financial stability concerns, liquidity risk, market risk, operational risk, high volatility, and lack of standardisation.
Should banks go ahead with the acquisition of crypto-assets or provide services associated with the industry, BCBS expects them to apply “a conservative prudential treatment to such exposures”.
As a result, BCBS is requesting input from industry stakeholders including banks, central banks, market participants, and payment systems operators.
The association is seeking views on the “features and risk characteristics of crypto-assets” that could inform the creation of a prudential treatment for banks and their exposures to the sector. It also wants “an illustrative example of potential capital and liquidity requirements” for exposures.
Those interested in submitting their views have until March 2020 to do so.