Basel Committee Wants To Require Banks to Disclose Crypto Holdings

Updated: 06 October 2023

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The Basel Committee on Banking Standards wants to require banks to disclose their crypto holdings as the body seeks to limit future contagion risk.

The move follows the collapse earlier this year of some major banks with crypto holdings, most notably Signature Bank and Silicon Valley Bank.

“The March 2023 banking turmoil was the most significant system-wide banking stress since the Great Financial Crisis in terms of its scale and scope,” the committee said. “The Committee agreed to consult on a set of disclosure requirements related to banks’ cryptoasset exposures.”

The disclosures would complement the prudential standard for such exposures that was published in December 2022, it said.

In a report on this year’s banking turmoil, it said that Signature Bank failed to understand the risk of its association with and reliance on crypto industry deposits or its vulnerability to contagion from crypto industry turmoil that occurred in late 2022 and into 2023.

A concentration of crypto companies among its customers put it in a precarious position when the “crypto winter” hit in 2022, it added.

Exponential Increase In Crypto Assets

The risk to banks has grown along with the exponential increase in crypto assets, it said. The market valuation of cryptocurrencies surged to $3 trillion in 20212 from just $16 billion six years ago, before falling back to about $1 trillion in March 2023, it said.

“While 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 – they are concentrated in a small number of banks,” it said

The Basel Committee on Banking Supervision is the primary global standard setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters.

It comprises 45 members from 28 jurisdictions, consisting of central banks and authorities with formal responsibility for the supervision of banking business.