In comments submitted to the Basel Committee on Banking Supervision addressing a consultation on the "prudential treatment of cryptoasset exposures," SIFMA emphasized the need for prompt action that balances "innovation, growth and regulatory conservatism." (SIFMA has referenced its support and participation in earlier comments on the Basel Committee consultation by a group of trade associations; see previous coverage.)
SIFMA stated that "regulatory coordination-not only among prudential regulators but also between prudential and market regulators-is necessary to achieve this balance, to minimize market fragmentation and to help ensure bank uptake and competitive equity across the financial services marketplace."
SIFMA recommended that the Basel Committee design a regulatory framework that:
- employs regulatory conservatism that is not excessively punitive and would not thereby inhibit banks from "meaningful involvement in the cryptoasset space";
- is "technology-neutral" and considers the risks associated with cryptoassets;
- enables "effective hedging to reduce risks, costs and volatility";
- distinguishes between cryptoassets held in the banking book and those held in the trading book;
- allows for Group 2 cryptoassets to have capital treatment that is rooted in the risks associated with the assets themselves, rather than their accounting treatment; and
- operates within an updated Basel framework to create "standards that are agile by design."
Further, SIFMA stated that clear interim guidance is needed to assist in banks' engagement in the cryptoasset market, given rapidly expanding markets and growing customer demands.
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