by Huw Jones
LONDON (Reuters) – The Basel Committee responsible for international coordination of banking regulation will complete before the end of the year the definition of “solid” rules on the provisions imposed on banks to cover possible losses linked to crypto-assets , its main supervisory body announced on Tuesday.
The Committee, which brings together regulators from the main financial centers of the world, proposed last year a gradual approach which notably provides for very strict rules for the provisioning of “unbacked” crypto-assets, such as bitcoin, deemed the most risky.
Banks may thus have to hold capital at least equal to their exposure to this type of asset in order to be able to absorb a total depreciation without damage.
The approach proposed by the committee is on the other hand more flexible for “stablecoins”, cryptoassets backed by traditional assets, a major international currency for example.
But the collapse in May of the TerraUSD, linked to the dollar, could have challenged this approach by casting doubt on the supposed stability of this asset class.
“With regard to crypto-assets, members reaffirmed the importance of designing a robust and prudent regulatory framework for banks’ exposure to crypto-assets that promotes responsible innovation while safeguarding financial stability,” explains the Group of Central Bank Governors and Banking Supervision Officials (GHOS) in a press release.
“The GHOS has instructed the Committee to finalize such a framework around the end of the year.”
The GHOS also “unanimously” called on all member countries to swiftly and fully implement the last part of “Basel III”, the set of rules defined after the global financial crisis of the late 2000s.
“The resurgence of inflation in many jurisdictions, combined with the deterioration of the macroeconomic outlook and the tightening of financial conditions, could reveal accumulated weaknesses within the financial system”, warns the GHOS in its press release.
More than two-thirds of Basel Committee member countries plan to have fully implemented Basel II by the end of 2024, he added.
The European Union and Britain, both members of the Basel Committee and GHOS, have announced plans to implement the new rules by early 2025, but the EU has proposed several changes.
(Reportage Huw Jones, French version Marc Angrand, edited by Nicolas Delame)