Steep capital requirements may hit Asian banks holding crypto assets

Regulators are eyeing the same set of capital guidelines used for conventional assets.

Bloomberg reports that regional banks may face new capital requirements for holding Bitcoin and other cryptocurrency-related assets as global regulators eye the possible implementation of measures previously designed for handling of more conventional assets like mortgages and securities. 

The regulations aim to determine how much capital banks need to protect themselves against losses, short-term market volatility and other threats, and could push up financing costs.

The Basel Committee is studying how its members, which include the Australian, Chinese, Hong Kong, Indian, Indonesian, Korean and SIngapore central banks handle exposures in virtual assets in their domestic guidelines.

Also read: Thailand is developing its digital currency for interbank transactions

Based on the results of this review and an analysis of banks’ direct and indirect exposures, the regulator will consider whether to formally clarify the prudential treatment of crypto-assets, according to the FSB.

The move runs in contrast with India whose top court earlier affirmed a ruling banning banks and other regulated institutions from dealing in cryptocurrencies.

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