Financial news

Central bankers and supervisors have backed rules, laid out by the Basel Committee, on how much capital banks should hold to cover cryptoassets on their books.

The Basel Committee is a powerful group of bank regulators that meets regularly to agree risk management rules that affect every bank.

On 16 December, the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee, endorsed a finalised prudential standard on banks’ cryptoasset exposures and the Committee’s work programme and strategic priorities for 2023 to 2024.

The programme prioritises work on emerging risks and vulnerabilities, digitalisation, climate-related financial risks as well as Basel III implementation.

Unbacked cryptoassets and stablecoins with ineffective stabilisation mechanisms will also be subject to a conservative prudential treatment.

“The endorsement by the GHOS marks an important milestone in developing a global regulatory baseline for mitigating risks to banks from cryptoassets,” said Tiff Macklem, chair of the GHOS and governor of the Bank of Canada. “It is important to continue to monitor bank-related developments in cryptoasset markets. We remain ready to act further if necessary.”

Pablo Hernández de Cos, chair of the Basel Committee and governor of the Bank of Spain, added: “The Committee’s standard on cryptoasset is a further example of our commitment, willingness and ability to act in a globally coordinated way to mitigate emerging financial stability risks.

“The Committee’s work programme for 2023–24 endorsed by GHOS today seeks to further strengthen the regulation, supervision and practices of banks worldwide. In particular, it focuses on emerging risks, digitalisation, climate-related financial risks and monitoring and implementing Basel III.”

The Committee will also continue to collaborate with other standard-setting bodies and the Financial Stability Board to ensure a consistent global regulatory treatment of stablecoins.