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wilslaw

For the first time, Crypto Assets gets warning from Global Bank Regulators

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For the first time, a consortium of global bank regulators is warning about crypto assets for the first time. In a statement released today by the Basel Committee, it says:

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The continued growth of crypto asset trading platforms and new financial products related to crypto assets has the potential to raise financial stability concerns and increase risks faced by banks.

 

In the release, the group warned that crypto assets present some risks for banks, which include credit risk, liquidity risk, operational risk (including fraud and cyber risks), market risk, legal and reputation risks, money laundering and terrorist financing risk.

 

The statement also faulted crypto assets for high volatility, lack of standardization and the fact they are constantly evolving. The Basel Committee has urged Banks to ensure they possess the relevant technical expertise to assess the risks stemming from crypto-assets and a robust risk management framework before jumping into them.

 

The consortium stressed:

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Banks are expected to implement risk management processes that are consistent with the high degree of risk of crypto-assets. Board and senior management should be provided with timely and relevant information related to the bank’s crypto-asset risk profile.

 

The Switzerland-based Committee also told banks around the world to publicly disclose any material crypto-asset exposures.

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