Basel Committee to advise on assessing risk for crypto assets

 The Basel Committee on Banking Supervision will consult on how lenders should shield themselves from crypto assets, as regulators turn up the heat on a growing but risky investment sector.

 

"The committee agreed to publish a consultation paper to seek the views of external stakeholders on the design of prudential treatment of banks' exposures to cryptoassets," the Swiss-based watchdog said in a statement. Prudential rules force banks to assign "risk weightings" to each type of asset such as loans or derivatives, which are then added up to determine how much capital should be held.

 

 The crypto-assets sector has grown rapidly but bitcoin has cooled from a high of $64,895.22 in mid-April to $36,005 on Monday after China began signalling a crackdown. The committee, made up of regulators from the world's main financial centres, said it discussed crypto-assets last Friday.

 

"While banks' exposures to crypto assets are currently limited, the continued growth and innovation in cryptoassets and related services, coupled with the heightened interest of some banks, could increase global financial stability concerns and risks to the banking system in the absence of a specified prudential treatment," it said.

 

The committee will publish its consultation paper this week.