World Bank Low: Closed consultation of the prudential treatment of cryptoasset exposures

On 30 September 2022, the Bank for International Settlements closed its public consultation on the prudential treatment of banks’ exposures to cryptoassets. This standard, endorsed by the Basel Committee on Banking Supervision's oversight body, the Group of Governors and Heads of Supervision, categorises cryptoassets into two groups based on a set of classification conditions. Group 1 cryptoassets, which include tokenised traditional assets and cryptoassets with effective stabilisation mechanisms, will be subject to capital requirements based on the risk weights of underlying exposures as outlined in the existing Basel Framework. Group 2 cryptoassets, which do not meet these conditions and thus pose additional and higher risks, will be subject to a newly prescribed conservative capital treatment. Furthermore, the standard introduces an infrastructure risk add-on for all Group 1 cryptoassets, a redemption risk test, and a supervision/regulation requirement for stablecoins to be eligible for inclusion in Group 1. Additionally, a bank’s total exposure to Group 2 cryptoassets must not exceed 2% of the bank’s Tier 1 capital.