The Basel Committee on Banking Supervision (BCBS) issued a public consultation on preliminary proposals for the prudential treatment of banks’ cryptoasset exposures. While banks’ exposures to cryptoassets are currently limited, the continued growth and innovation in cryptoassets and related services, coupled with the heightened interest of some banks, could increase global financial stability concerns and risks to the banking system in the absence of a specified prudential treatment.
The proposed prudential treatment outlined in the consultation divides cryptoassets into two broad groups:
Group 1 cryptoassets – these fulfil a set of classification conditions and as such are eligible for treatment under the existing Basel Framework (with some modifications and additional guidance). These include certain tokenised traditional assets and stablecoins.
Group 2 cryptoassets – are those, such as bitcoin, that do not fulfil the classification conditions. Since these pose additional and higher risks, they would be subject to a new conservative prudential treatment.
Central bank digital currencies are not within the scope of the consultation.