Basel Committee Establishes Policy and Supervisory Initiatives For Banks’ Exposure to

The Basel Committee on Banking Supervision (the Committee), the standard setter for the prudential regulation of banks has turned its attention to the crypto world as it approves a disclosure framework for banks’ cryptoasset exposures. 

The Committee met virtually on 2 and 3 July to discuss policy and supervisory initiatives. During this meeting, it also agreed to make targeted amendments to its cryptoasset standard and consult on updated principles for the sound management of third-party risk.

It reviewed the comments received on its consultations related to a disclosure framework for banks’ cryptoasset exposures and a set of targeted amendments to its cryptoasset standard published in December 2022.

The approved finalised disclosure framework includes a standardised set of public tables and templates covering banks’ cryptoasset exposures. These disclosures aim to enhance information availability and support market discipline. The framework will be published later this month, with an implementation date of 1 January 2026.

Reviewing the standard and interest rates

The Committee also approved a set of targeted revisions to the cryptoasset prudential standard. These revisions aim to further promote a consistent understanding of the standard, particularly regarding the criteria for stablecoins to receive a preferential “Group 1b” regulatory treatment. The updated standard will be published later this month alongside the framework, with the standard looking to be implemented on the same date too.

Members also discussed the prudential implications of banks as potential issuers of tokenised deposits and stablecoins. Members noted that the scale and magnitude of financial stability risks from such products depend in part on their specific structures and jurisdictional laws and regulations. Based on current market developments, these risks are broadly captured by the Basel Framework. The Committee will continue to monitor this area and other developments in the cryptoasset markets.

The Committee reviewed the comments received on its consultation proposing a set of targeted adjustments to its standard on interest rate risk in the banking book (IRRBB).

It approved a set of adjustments to the specified interest rate shocks in the IRRBB standard, consistent with commitments in the standard to periodically update their calibration. The Committee also agreed to make targeted adjustments to the methodology used to calculate these shocks to better capture interest rate changes during periods when rates are close to zero. The updated standard will be published later this month, with an implementation date of 1 January 2026 for the adjustments.

These changes are unrelated to the Committee’s analytical work on IRRBB following the March 2023 banking turmoil, which is ongoing.

Examining risks

The Committee agreed to consult on principles for the sound management of third-party risk. The principles would supersede the current guidance on outsourcing in financial services with respect to the banking system. The updated principles reflect the evolution of a larger and more diverse environment of third-party service providers and would help provide a common baseline for banks and supervisors in managing third-party risks. The consultation will be published later this month.

Additionally, it reviewed the comments received on its consultation proposing a Pillar 3 disclosure framework for climate-related financial risks. It agreed to continue to work on finalising such a framework as part of its holistic approach to addressing climate-related financial risks.