Will there be new Basel capital rules for bank cryptocurrency exposure?

Today the Basel Committee on Banking Supervision (BCBS) outlined some suggested procedures for banks that have exposure to cryptocurrencies. The BCBS sets global regulatory standards for banks including the bank capital adequacy rules which were tightened after the 2008 banking crisis. This morning’s short announcement concluded that “the Committee will in due course clarify the prudential treatment of such exposures to appropriately reflect the high degree of risk of crypto-assets.”

A little speculation

Ledger Insight’s interpretation is there’s a good chance that “treatment” could involve additional capital requirements for bank cryptocurrency exposures. Given the volatility of cryptocurrencies the capital needs could be significant which would be a deterrent to adoption by financial institutions.

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