FIA joined five trade associations in a response to the Basel Committee on Banking Supervision’s consultative document on the prudential treatment of cryptoassets. The associations support BCBS’s decision to engage in an iterative approach to the prudential treatment of cryptoassets.
The associations emphasize the need to provide clarity for banks as the client demand grows.
FIA particularly notes the BCBS should not penalize banks that serve as an intermediary role on behalf of clients, providing access to central clearing and transparent, regulated markets, often for risk mitigation and hedging purposes. For this purpose, the existing prudential framework for cleared transactions should be available to reflect differences in risk and market function of cleared derivatives transactions.
The associations respectfully request that the Basel Committee ensures that the framework: (1) is not overly conservative, so that it does not preclude regulated bank involvement in certain segments of cryptoasset markets; (2) recognizes effective hedging; (3) separately capitalizes the banking book and trading book; (4) ties capital treatment of cryptoassets to the risks of the assets, rather than the accounting treatment; and (5) is agile by design.
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