Regulates Propose Cryptocurrency Exposure Plan in Basel

The Basel Committee on Banking Supervision has published a draft guidance for banks' activities in and exposure to cryptocurrencies. The proposals, which were previewed two weeks prior to their publication, build upon the prudential standard for crypto exposures published by the committee last December.

The draft guidance is aimed at banks and is related to their activities in and exposure to crypto. According to Debevoise & Plimpton attorney Chen Xu, the finalized framework is significant as it establishes a common baseline for global regulators to build upon.

The standard outlines two groups of crypto assets: Group 1 are tokenized traditional assets and stablecoins, while Group 2 are riskier products. Group 1 assets are subject to capital requirements based on underlying exposures as set out in the existing Basel framework. For Group 2 assets, the finalized guidelines limit bank exposure to 1% of their Tier 1 capital.

Banks will be required to disclose qualitative and quantitative information on their crypto activities and exposures. This includes details of the accounting classifications of their exposures to cryptoassets and cryptoliabilities. The Basel Committee expects a common format for disclosures to support market discipline and reduce information asymmetry.

The proposals are open for public comment until January 21, 2026. The public can purchase licensing rights for the proposed guidelines.

Major banks have begun disclosing their crypto-related interests and exposures since the regulatory disclosure deadline of December 31, 2024, under new European rules. Institutions involved with stablecoins or custody services are particularly scrutinized, but detailed named lists of banks publicly disclosing this data up to 2025 are not specified in the available information.

The finalized framework, as established by the Basel Committee, is significant for global regulators as it provides a common approach to regulating banks' involvement in the crypto market. The finalized framework is expected to provide clarity and consistency in the regulation of banks' crypto activities, reducing risk and promoting market stability.