Governors and Heads of Supervision endorse global bank prudential standard for cryptoassets

• The Basel Committee's oversight body endorses a global prudential standard for banks' exposures to cryptoassets, for implementation by 1 January 2025.
• Endorses the Committee's work programme and strategic priorities for 2023–24.
• The programme prioritises work on emerging risks and vulnerabilities, digitalisation, climate-related financial risks and Basel III implementation.

Basel - The Bank of International Settlements (IBS) has announced that the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision, met on 16 December to endorse a finalised prudential standard on banks' cryptoasset exposures and the Committee's work programme and strategic priorities for 2023–24.

"The endorsement by the GHOS marks an important milestone in developing a global regulatory baseline for mitigating risks to banks from cryptoassets. It is important to continue to monitor bank-related developments in cryptoasset markets. We remain ready to act further if necessary," said Tiff Macklem, Chair of the GHOS and Governor of the Bank of Canada.

Pablo Hernández de Cos, Chair of the Basel Committee and Governor of the Bank of Spain, said: "The Committee's standard on cryptoasset is another example of our members' steadfast commitment to global cooperation and willingness to act swiftly to mitigate emerging financial stability risks.

"The Committee's work programme for 2023–24 endorsed by GHOS today seeks to further strengthen the regulation, supervision and practices of banks worldwide. The Committee will be devoting greater focus on emerging risks, digitalisation, climate-related financial risks and monitoring and implementing Basel III." 

Cryptoassets

The GHOS endorsed the Committee's finalised prudential treatment for banks' exposures to cryptoassets. Unbacked cryptoassets and stablecoins with ineffective stabilisation mechanisms will be subject to a conservative prudential treatment.

The standard will provide a robust and prudent global regulatory framework for internationally active banks' exposures to cryptoassets that promotes responsible innovation while preserving financial stability. GHOS members agreed to implement the standard by 1 January 2025, and tasked the Committee with monitoring the implementation and effects of the standard.

While the global banking system's direct exposures to cryptoassets remain relatively low, recent developments have further highlighted the importance of having a strong global minimum prudential framework for internationally active banks to mitigate risks from cryptoassets.

To that end, the GHOS tasked the Committee with continuing to assess bank-related developments in cryptoasset markets, including the role of banks as stablecoin issuers, custodians of cryptoassets and broader potential channels of interconnections. More generally, the Committee will continue to collaborate with other standard-setting bodies and the Financial Stability Board to ensure a consistent global regulatory treatment of stablecoins.

Basel Committee work programme for 2023–24

The GHOS also endorsed the strategic priorities and work programme of the Committee for 2023–24. In addition to pursuing a forward-looking approach to identifying and assessing emerging risks and vulnerabilities to the global banking system, the work programme places high priority on work related to the ongoing digitalisation of finance, climate-related financial risks and monitoring, implementing and evaluating the Basel III framework.