Basel Committee to Review Proposed Capital Requirements for Banks With Crypto Assets

The global standard-setter for banking regulation plans to elaborate on its proposed capital requirements for crypto assets after receiving criticism from leading global banks.

• The Bank for International Settlements’ Basel Committee said Tuesday that it will “further specify” the proposed capital requirement and issue a new consultative document by mid-2022.
• The statement was released after the committee reviewed comments on its consultation from June, which said banks exposed to high-risk crypto assets like bitcoin should hold capital equal to the exposure.
• Under that proposal, a bank with an original exposure to crypto of $100 has a minimum capital requirement of $100.
• A forum of some of the largest global banks, including JPMorgan Chase and Deutsche Bank, opposed the requirement, calling it “overly conservative” and said it could preclude bank involvement in the crypto market.
• In Tuesday’s statement, the Basel Committee said its members had reiterated the importance of “developing a conservative risk-based global minimum standard” to manage risks to the banking system from crypto assets that is consistent with the general principles laid out in its previous consultation.