Basel Committee has developed guidelines for working with crypto assets for banks
The Basel Committee on Banking Supervision believes that the spread of cryptocurrencies may be a negative signal for the future of the global banking system.
The organization operating at the Bank for International Settlements and developing uniform standards and methods for regulating banking activities noted that cryptocurrency assets were able to gain popularity, despite the high levels of volatility and risks associated with them. The committee said that such financial instruments are just beginning their development, but already now they carry many risks for banks associated with liquidity, lending, operating activities, fraud, money laundering, as well as relations with authorities and reputation..
“While the crypto asset market remains small relative to the global financial system and banks have little direct link to it, the Committee believes that the continued growth of crypto asset trading platforms and new commercial products related to crypto assets could set the stage for concerns about financial stability and exacerbate the risks that banks have to face “, – said in the publication.
In this regard, the Basel Committee has outlined a minimum set of standards that banks need to adhere to when working with crypto assets. In particular, banks should conduct a thorough analysis of the risks identified by the organization before deciding whether to start dealing with cryptocurrencies or related products, and use robust risk management systems to determine the safe scale for introducing such assets into their offering..
The analysis of associated risks in direct and indirect interaction with cryptocurrencies should take into account the size of the bank’s own capital and its ability to provide liquidity. In addition, the Basel Committee calls on banks to disclose all available information about their work with cryptocurrencies, including plans in this area, as part of a dialogue with regulators..