On 30 June 2022, the Basel Committee published a second consultation document on the prudential treatment of banks’ crypto-asset exposures. Key points regarding the crypto industry include the following:
- Crypto-assets are still divided into two broad groups: those eligible for treatment under the existing Basel Framework with some modifications, and those unbacked crypto-asset and stablecoins with ineffective stabilisation mechanisms;
- 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 (DLT);
- Given the rapid evolution and volatile nature of the crypto-asset market, the Committee will continue to closely monitor developments during the consultation period;
- The standards that the Committee aims to finalise around year-end may be tightened if shortcomings in the consultation proposals are identified or new elements of risks emerge and based on the Committee’s overall assessment of the risks.