Central bankers endorse crypto capital rules

The first proposed global capital standards for cryptoassets got an endorsement from the group of central bankers that oversees the Basel Committee on Banking Supervision.

The Governors and Heads of Supervision (GHOS) formally backed the Basel Committee’s proposed prudential standard for cryptoassets, and its strategic priorities for 2023–2024.

“Today’s 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, in a release.

Earlier this year, the Basel Committee proposed its approach to setting capital requirements for banks’ crypto exposures, which imposes high capital standards on “unbacked cryptoassets and stablecoins with ineffective stabilisation mechanisms.”

Now, the members of the GHOS have agreed to implement the standard by Jan. 1, 2025.

“The standard will provide a robust and prudent global regulatory framework for internationally active banks’ exposures to cryptoassets that promotes responsible innovation while preserving financial stability,” the GHOS said.

The group noted that the global banking system’s direct exposure to cryptoassets remained relatively low, but indicated that recent turmoil in the sector has “further highlighted the importance of having a strong global minimum prudential framework for internationally active banks to mitigate risks from cryptoassets.”

GHOS also called on the Basel Committee to continue overseeing banks’ activities in cryptoasset markets, including the role of banks as stablecoin issuers, and as custodians of cryptoassets.

“It is important to continue to monitor bank-related developments in cryptoasset markets. We remain ready to act further if necessary,” Macklem added.

Additionally, the GHOS signed off on the Basel Committee’s plans for 2023–2024, including its work on the digitalization of finance, climate-related financial risks, and the ongoing implementation of the Basel III capital regime.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.