The Basel Committee on Banking Supervision has recently announced the final disclosure framework for banks’ crypto exposures, aimed at enhancing transparency and ensuring a consistent regulatory approach in the digital assets field. This comprehensive framework, known as DIS55, requires banks to provide detailed information on their crypto activities through standardized tables and templates. By standardizing these disclosures, the Committee aims to improve market discipline, reduce information gaps among market participants, and ultimately contribute to greater market transparency and stability.
One of the key amendments in the Basel Committee’s standards is the tightening of criteria for certain stablecoins to receive preferential regulatory treatment. These changes are designed to clarify the regulatory framework, promote a consistent understanding of standards across jurisdictions, and ensure a robust engagement with the cryptoasset market. The Committee emphasizes the importance of monitoring developments in the cryptoasset markets and adapting its regulatory framework as needed to address emerging risks.
Under the new disclosure framework, banks are mandated to provide qualitative descriptions of their crypto-related business, quantitative data on capital and liquidity requirements, and information on risk assessment and classification of assets. This includes disclosing exposures, accounting classification, liquidity needs for crypto assets, and average daily values for crypto holdings to paint a more accurate picture of their risk levels. Despite industry feedback, the Committee maintains the importance of reporting credit and market risks for tokenized assets separately.
In addition to the disclosure framework, the Basel Committee has revised its prudential standard for crypto-assets. The amendments focus on tightening the criteria under which certain stablecoins can receive preferential “Group 1b” regulatory treatment. These changes, along with other technical amendments such as removing detailed requirements and clarifying the scope of disclosures, highlight the Committee’s commitment to promoting a consistent regulatory approach and addressing emerging risks in the evolving cryptoasset market.
The Basel Committee’s updated disclosure framework and standards represent significant steps towards enhancing the robustness of banks’ engagement with the cryptoasset market. By requiring detailed information on crypto activities, enhancing risk assessment and disclosure requirements, and tightening criteria for stablecoins, the Committee aims to promote transparency, stability, and market discipline in the digital assets field.
