The Basel Committee on Banking Supervision (BCBS), the world banking regulatory body, calls for a conservative framework for the prudential treatment of crypto assets.
The information was released through a report on the prudential treatment of crypto assets where banking regulators in the United States, Europe and Japan argues that the growth of cryptocurrencies and related services can negatively affect financial stability and increase financial stability. Risks that challenges banks.
“Crypto assets are a class of immature assets given the lack of standardization and constant evolution. Some crypto assets have demonstrated a high degree of volatility and present risks for banks, including liquidity risk, also for credit, market, operational risk (including fraud and cyber risks), money laundering and terrorist financing, besides legal and reputational risks,” as noted in the report.
The document also specifies that the exposure to cryptocurrencies can be directly when the bank has the assets or indirectly when, for example, the bank owns crypto-derivatives.
However, the Basel committee recommends that the receipt of crypto assets not be made as a guarantee of reducing the risk of high-quality liquid active credit for the liquidity coverage ratio or as a net stable financing coefficient. “This treatment reflects the “high degree of uncertainty about the positive realizable value of crypto assets in times of stress.”