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Representations of virtual currency stand on a motherboard in this photo illustration taken on May 20, 2021. REUTERS / Dado Ruvic / Illustration
Basel Committee on Banking Supervision to consult on how lenders should protect themselves from crypto assets, global banking watchdog said on Monday, as regulators step up pressure on growing investment industry but risky.
“The committee has agreed to publish a consultation document to seek the views of external stakeholders on the design of the prudential treatment of banks’ exposures to cryptoassets,” the Swiss-based watchdog said in a statement.
Prudential rules require banks to assign “risk weights” to each type of asset such as loans or derivatives, which are then added together to determine the amount of capital to be held.
The crypto-asset sector has grown rapidly, but bitcoin has climbed from a high of $ 64,895.22 in mid-April to $ 36,005 on Monday after China began reporting a crackdown.
The committee, made up of regulators from the world’s major financial centers, said it discussed cryptoassets last Friday.
“While banks’ exposures to crypto assets are currently limited, continued growth and innovation in crypto assets and related services, coupled with increased interest from some banks, could increase global financial stability issues and risks for the banking system in the absence of prudential treatment, ”he said.
The committee will release its consultation paper this week.
HSBC (HSBA.L), Europe’s largest bank, told Reuters last month it had no plans to join rival lenders such as Goldman Sachs in launching a trading desk of cryptocurrency or gift the digital coins, claiming they are too volatile and lack transparency. Read more
The Bank of England has said investors should be prepared to lose all of their money if they invest in crypto assets.
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