New rules for the crypto exposures of banks

European rules for banks’ cryptoasset exposures 

On 19 June 2024 the CRR3 and the Capital Requirements Directive 6 (CRD6) were published. This legislative package includes new rules regarding banks’ crypto activities, such as reporting, disclosure and risk management requirements. Furthermore, it introduces a transitional regime for the prudential treatment of banks’ direct crypto asset exposures, which is based on the Basel crypto standard and the Markets in Crypto-Assets Regulation (MiCAR) as much as possible. The transitional crypto regime will apply from 9 July 2024 onwards and consists of specific risk weights for various categories of crypto asset exposures by banks. Moreover, the direct exposures of banks to the riskiest crypto assets are limited to 1% of Tier 1 capital. 

Revision of Basel crypto standard 

The Basel Committee on Banking Supervision has published several amendments to the Basel crypto standard on 17 July 2024. This standard prescribes the prudential treatment of banks’ direct exposures to crypto assets. Examples of important changes are (i) a clarification of the requirements regarding reserve assets of stablecoins which can classify as Group 1 (and thus benefit from a relatively mild capital treatment) and (ii) a due diligence requirement for banks to ensure they have a good understanding of the stabilisation mechanism of the stablecoin.  

The implementation date of the revised Basel crypto standard is 1 January 2026. The European Commission is mandated in CRR3 to publish a legislative proposal by mid-2025 to implement the revised standard into European legislation. As the current direct crypto asset exposures of banks are still rather low, and crypto markets are in continuous development, the Basel Committee will assess two to three years after the implementation whether a review of the crypto standard is called for. 

More information 

• CRR3: Regulation - EU - 2024/1623 - EN - EUR-Lex (europa.eu)  
• CRD6: Directive - EU - 2024/1619 - EN - EUR-Lex (europa.eu)  
• Press release revised crypto standard BCBS: Press release: Basel Committee publishes final disclosure framework for banks' cryptoasset exposures and targeted amendments to its cryptoasset standard (bis.org)
• Press release: Governors and Heads of Supervision reiterate commitment to Basel III implementation and provide update on cryptoasset standard (bis.org)