Proposal released by Basel regarding cryptocurrency asset disclosure

The Basel Committee on Banking Supervision has published draft guidance on the disclosure of banks' activities and exposures in the cryptocurrency sector. The finalized framework, set to be implemented in 2025, aims to establish a common baseline for global regulators to build upon, as stated by Debevoise & Plimpton attorney Chen Xu.

The proposals aim to help market participants make informed decisions based on clear disclosures. The finalized framework expects a common format for disclosures to support market discipline and reduce information asymmetry. Banks will be required to disclose qualitative and quantitative information on their crypto activities and exposures, among other details.

The draft guidance requires banks to provide details of the accounting classifications of their exposures to cryptoassets and cryptoliabilities. Two groups of crypto assets are outlined in the prudential standard: Group 1, which includes tokenized traditional assets and stablecoins, and Group 2, riskier products that don't fit Group 1 standards. For Group 2 assets, the finalized guidelines limit bank exposure to 1% of their Tier 1 capital.

Group 1 assets are subject to capital requirements based on underlying exposures as set out in the existing Basel framework. The proposals are a continuation of the prudential standard for crypto exposures published by the Basel committee last December.

The publication of the draft guidance was preceded by a two-week preview, allowing stakeholders to familiarise themselves with the proposals. A public comment period on the crypto proposals is open until January 21, 2025, providing an opportunity for feedback on the crypto disclosure requirements.

The proposals are part of the ongoing efforts to regulate banks' activities in the crypto sector. The finalized framework, once implemented, is expected to play a significant role in fostering transparency and accountability in the industry. The public can purchase licensing rights for the proposed guidelines.

The Basel Committee on Banking Supervision published the draft guidance on banks' activities in crypto on Tuesday, 2025. The finalized framework, as stated by Debevoise & Plimpton attorney Chen Xu, establishes a common baseline for global regulators to build upon, helping to create a more secure and stable crypto market.