The Basel Committee on Banking Supervision has approved a new disclosure framework for banks’ exposure to cryptocurrencies, which must be implemented by 2026. This initiative aims to bolster market discipline and ensure sufficient transparency regarding crypto-related risks.
Key Details of the Framework
The committee, a part of the Bank for International Settlements, plans to publish the framework details later this month. As the leading global standard setter for prudential banks, the Basel Committee has crafted a set of public tables and templates that outline banks’ crypto asset exposures. This framework requires banks to disclose both qualitative and quantitative information about their crypto activities.
Consultative Process and Revisions
The finalized framework emerged after reviewing responses to a consultation paper released in December 2022. The consultation process highlighted the need for banks to provide detailed information about their involvement with cryptocurrencies to better assess associated risks.
In addition to the disclosure framework, the committee approved targeted revisions to the crypto asset prudential standards. These revisions are designed to promote a consistent understanding of the standards, particularly the criteria for stablecoins to qualify for preferential ‘Group 1b’ regulatory treatment. The updated version of these standards will also be published later this month and must be adopted by 2026.
Also Read: Brazil Proposes New Taxation Framework for Cryptocurrencies
Supporting Market Discipline
The new disclosure requirements are part of a broader effort by central banks globally to enhance transparency and support market discipline. By ensuring that banks provide comprehensive information about their crypto exposures, regulators aim to mitigate potential risks and maintain financial stability.
Implementation Timeline
With the framework set for publication later this month, banks will have until the beginning of 2026 to comply with the new requirements. This timeline allows banks to adapt to the new standards and ensure their reporting mechanisms are robust and accurate.
The Basel Committee’s new framework represents a significant step towards regulating the rapidly evolving crypto market. By mandating comprehensive disclosure of crypto exposures, the committee aims to enhance transparency, support market discipline, and ensure the stability of the global financial system.
