Basel Committee proposes standardized templates for banks to disclose crypto exposure, enhancing transparency.

By 2025, it is suggested by a group of international financial authorities that large institutions reveal their exposure to cryptocurrency holdings.

Standardised disclosure templates were included in the draught guidelines presented by the Basel Committee on Banking Supervision (BCBS) on Tuesday. The committee stated that it will improve market discipline and reduce the knowledge gap between banks and market players by using common templates for banks‘ crypto asset activity.

The committee stated in a statement that banks would have to “disclose quantitative information on exposures to crypto assets and the related capital and liquidity requirements, as well as qualitative information on their activities related to crypto assets.”

The organisation stated that banks would also have to give information about the accounting classifications of their exposure to cryptocurrency assets and liabilities.

Member countries of the Bank for International Settlements (BIS) generally incorporate the Basel Committee’s standards into their own regulatory frameworks to some degree, even though they primarily serve as “recommendations.”

The Basel committee intends to start enforcing the regulations on January 1, 2025, and has extended the deadline for opinions on the proposal until January 31, 2024.

The most recent action comes after Basel established new regulations in December 2022 on the capital buffers banks are required to hold for different types of cryptocurrency holdings.

The committee suggested guidelines for restricting a bank’s transactions with particular digital assets. These include unbacked cryptocurrencies, tokenized traditional assets, and stablecoins, where the exposure should preferably remain below 1% and not exceed 2%.

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