Financial institutions, under the new Basel plan, will be obligated to reveal the extent of their involvement in digital currencies such as Bitcoin and others.

The Basel Committee on Banking Supervision (BCBS) has announced a plan to make banks disclose their exposure to cryptocurrencies, following the failure of Signature Bank, one of the earliest banking sector casualties in 2023. The committee published a report on Thursday, linking the regional banking crisis to crypto banks' exposure to the volatile crypto market.

According to the report, Signature Bank's management failed to comprehend the risks associated with its dependence on crypto industry deposits. The bank's management did not acknowledge that their exposure to the crypto industry might lead to customer deposits being pulled or reduced during the crypto winter. The Federal Deposit Insurance Corp. placed blame for Signature's closure squarely on poor management.

The global banking system's direct exposures to cryptoassets are limited, amounting to just under €4 billion, or 0.004% of total exposures as of end-June 2022. These exposures are concentrated in a small number of banks.

The BCBS proposals for disclosure requirements related to banks' cryptoasset exposures will be published soon, complementing the prudential standard for crypto exposures published in December 2022. The committee did not acknowledge any purchase licensing rights in their report.

Crypto, along with the growth of non-bank financial intermediation and the ongoing digitalization of finance, is considered one of the structural trends that may have contributed to fragilities in the sector early this year. A separate report by the committee links this year's regional banking crisis to crypto banks' exposure to the volatile crypto market.

The market valuation of cryptocurrencies grew from about $16 billion six years ago to nearly $3 trillion in 2021 before falling back to a valuation of just over $1 trillion at the beginning of March 2023. However, the report did not provide any new information about the market valuation, direct exposures, or concentration of exposures in the global banking system related to cryptoassets.

Regulators were at odds over who to blame for bank failures, with Securities and Exchange Commission Chair Gary Gensler attributing failures including Signature to their crypto ties, while New York State Department of Financial Services Superintendent Adrienne Harris blamed Signature's failure on depositor outflows.

The search results do not explicitly list the names of banks regulated in Switzerland with a high concentration of crypto activities. However, it is known that Zug and Zurich are key Swiss locations for crypto companies, with over 60% of firms based there, followed by Liechtenstein and Geneva. The total number of local crypto providers grew, but specific bank names are not provided in the sources available. Therefore, currently no specific Swiss banks with high crypto concentration can be confirmed from the given data.

The report did not discuss the technology used by Signature Bank or the crypto industry in detail. It also did not provide specific details about payments, regulations, or policy related to Signature Bank or the crypto industry.

Financial institutions, under the new Basel plan, will be obligated to reveal the extent of their involvement in digital currencies such as Bitcoin and others.