On 30 June, the Basel Committee on Banking Supervision issued a second public consultation on the prudential treatment of banks’ cryptoasset exposures. The basic structure of the proposal in the first consultation is maintained, with cryptoassets divided into two broad groups: Group 1 includes those eligible for treatment under the existing Basel Framework with some modifications. Group 2 includes unbacked cryptoasset and stablecoins with ineffective stabilisation mechanisms, which are subject to a new conservative prudential treatment.
The updated proposals provide more detail on the proposed standard and include new elements such as an infrastructure risk add-on to cover the new and evolving risks of distributed ledger technologies; adjustments to increase risk sensitivity; and an overall gross limit on Group 2 cryptoassets.
Given the rapid evolution and volatile nature of the cryptoasset market, the Committee will continue to closely monitor developments during the consultation period. The standards that the Committee aims to finalise around the year-end may be tightened if shortcomings in the consultation proposals are identified or if new risk elements emerge, based on the Committee’s overall assessment.