Although the prudential treatment of crypto-assets in the banking book has recently begun to take shape after the BCBS' Crypto-Asset Standard, a specific framework for crypto-asset exposures of investment firms remains absent thus far. This article examines the current prudential implications for banks and investment firms holding or trading crypto-assets and explores solutions for addressing prudential requirements for both direct and indirect exposures to crypto-assets.
1. Introduction
On 18 July 2024, the Dutch Central Bank (De Nederlandsche Bank) published a news item highlighting two new regulatory developments relevant to banks regarding their crypto-asset exposures.2DNB, New rules for the crypto exposures of banks, Press Release, 18 July 2024. Firstly, the Capital Requirements Regulation 33Regulation (EU) 2024/1623 of the European Parliament and of the Council of 31 May 2024 amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor. ("CRR3") introduced a transitional regime for banks' direct crypto-asset exposures entering into force on 1 January 2025. Secondly, the Basel Committee on Banking Supervision ("BCBS") released a revised version of the Basel crypto-standard on 17 July 2024 ("Crypto-Asset Standard").4BCBS, SCO60 Cryptoasset exposures, (2024). Where we refer to a SCO60 number, we refer to the provisions of this forthcoming, amended standard.