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ICMA has co-signed, alongside the Global Financial Markets Association and its members, the Futures Industry Association, the Institute of International Finance, the International Swaps and Derivatives Association, the International Securities Lending Association, the Bank Policy Institute, and the Financial Services Forum, a joint trade association response which was submitted on 30 September to the Basel Committee on Banking Supervision’s (BCBS) second consultation on the prudential treatment of crypto-assets exposures. This broad group encompasses many sectors across the industry, offering a comprehensive, global response grounded on a broad scope of expertise to the Consultation.
The Associations’ comments aim to improve the mutual understanding of current and emerging risks of private digital assets that depend on cryptography and distributed ledger or similar technology, the role of existing processes and frameworks for regulated entities to manage such risks, and to identify balanced solutions to help in the design of a capital framework that supports enhancing financial stability while avoiding overly restrictive limits to innovation. Achieving an appropriate prudential framework that meets our aligned objectives is critical to meet customer demand and harness the benefits of DLT and similar technologies for the financial services sector.
Bringing cryptoasset activities into the regulatory perimeter where institutions are subject to comprehensive regulation and supervision and have significant experience managing financial and operational risks would be beneficial for the stability of the financial system. Enabling banks to utilise cryptography and DLT or similar technology would also allow bank customers and the broader financial sector to benefit from the advances in efficiency, transparency and speed that these innovations offer.
The joint trade association response can be found here.