CoinDesk reports:
The Basel Banking Supervision Committee announced yesterday (Wednesday) that the organization has confirmed the approval of a final disclosure framework, which includes a set of standardized forms and templates for banks to report their exposure to crypto assets.
Appropriate disclosure framework
The organization held meetings on July 2nd and 3rd to discuss various policy and regulatory incentive measures, ultimately finalizing this decision. The framework is set to be released later this month, taking effect from January 1, 2026.
At the July meeting, #BaselCommittee approved a disclosure framework for banks’ exposure to crypto assets and agreed to make targeted revisions to their crypto asset standards #BaselIII https://t.co/D62XJBuuc7pic.twitter.com/VHYvHepvXA — Bank for International Settlements (@BIS_org) July 3, 2024
The disclosure framework was initially proposed in December 2022 and opened for feedback in May 2023. It includes a series of targeted amendments to the original proposal and revisions to the prudent standards for stable coin holdings.
An official statement said, “These revisions aim to further promote a consistent understanding of the standard, particularly regarding the standards for stable coins receiving preferential ‘1b group’ regulatory treatment. The updated standard will be released later this month, with an effective date of January 1, 2026.”
Since 2019, the committee has been evaluating banks’ exposure to cryptocurrencies. In 2021, the company suggested classifying cryptocurrencies as high-risk category 2 assets, assigning them a 1250% risk weight. This would require banks to hold capital equivalent to their exposure to cryptocurrencies. Additionally, holdings in category 2 would be limited to below 1% of their category 1 holdings.
Stablecoins have been given the new designation of 1b, exempting them from additional requirements outside of the category 1 assets. However, stablecoins with “inadequate stability mechanisms” are classified under category 2. The proposed restrictions have received a lukewarm response from the industry.
Assessing risks
Members of the organization further discussed the prudent implications for banks acting as issuers of tokenized deposits and stable coins. The scale and stability of such products depend to some extent on their specific structures and regulatory frameworks.
The announcement added, “Given current market developments, the Basel framework broadly covers these risks.” “The committee will continue to monitor this area as well as other developments in the crypto asset market.”
Meanwhile, the EU has recently implemented regulatory oversight for stable coin issuers in the crypto asset market (MiCA). As a result, stable coin issuers will need to comply with both MiCA and Basel Committee regulations when they come into effect.
