The Basel Committee on Banking Supervision has unveiled a new plan that will require banks to disclose their cryptocurrency holdings.
This development comes on the heels of a tumultuous year that witnessed the collapse of several major crypto firms as well as crypto-focused lenders Signature and Silicon Valley Bank.
International regulators have pointed to the sudden surge in the popularity of cryptocurrencies as a contributing factor to these collapses, prompting the Basel Committee to take action.
The committee, responsible for establishing standards in traditional finance, had previously acknowledged the need for banks to allocate substantial capital to cover their holdings of unbacked cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).
The watchdog is now going a step further by insisting on full disclosure of these holdings.
In a forthcoming consultation paper, the Basel Committee will present a comprehensive set of disclosure requirements related to banks' crypto asset exposures.
These requirements will complement existing capital mandates for digital assets that were finalized in December.
The move is seen as a proactive measure to prevent potential contagion within the financial system.
The Basel grouping, which comprises bank supervisors from 28 global jurisdictions, including major players like the United States, the United Kingdom, and the European Union, had previously indicated their commitment to monitoring crypto-related norms and making necessary modifications.
However, the introduction of separate disclosure rules represents a significant step toward enhancing transparency in the crypto space.
In a recently published report, the Committee highlighted what it called the "most significant system-wide bankingRead more on cryptonews.com