Global banking watchdog to study capital requirements for crypto assets By Reuters

Global banking watchdog to study capital requirements for crypto assets

By Huw Jones

LONDON (Reuters) – Global banking regulators said on Thursday they will consider how much capital lenders should be setting aside to cover risks from any holdings of crypto assets.

The Basel Committee, which includes banking regulators from the United States, Europe and Japan, said it had agreed to publish a discussion paper on the prudential treatment of crypto assets – digital assets like bitcoin () that are not linked to any physical asset.

“The Committee reiterated its view that the prudential treatment of banks’ crypto asset exposures should appropriately reflect the high degree of risk of crypto assets,” the committee said in a statement at the end of a two-day meeting in Madrid.

Crypto assets have risen up the regulatory agenda after social media giant Facebook (O:) unveiled plans for a digital currency project called Libra.

“In light of ongoing initiatives in crypto asset markets, the Committee will seek the views of stakeholders on a wide range of issues related to the prudential treatment of crypto assets,” it said.

The committee also ratcheted up pressure on lenders to ditch the tarnished Libor interest rate benchmark which some banks have been fined for trying to rig.

Britain and the United States want lenders to switch to using rates compiled by their central banks by the end of 2021.

“The committee places high priority on this issue and expects all banks to be adequately prepared to meet the transition timeline,” it said.

“The committee will consider whether any further regulatory or supervisory measures are warranted to help achieve this outcome.”

SOVEREIGN DEBT

The Basel Committee said it will consult next month on templates for banks to disclose their exposure to government bonds.

The application of such templates would, however, be on voluntary basis with Basel member countries free to decide whether or not to…

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