BoE’s Woods may front-run rules on banks’ crypto holdings
By Neil Dennis
13:47, 23 September 2021
Bank of England deputy governor Sam Woods said Thursday he was prepared to front-run proposed global rules on banks' holdings of cryptocurrencies.
Global banking regulators under the Basel Committee are in the process of formulating new rules that will prevent banks from building up large exposures to cryptocurrencies that are not adequately backed to cover losses in full.
Conservative approach
Woods told Reuters and the BoE confirmed to Capital.com that, while he didn't want to prevent Britain's banks from taking out investments that make commercial sense, he wanted a more conservative approach when dealing with a volatile and largely unregulated asset class such cryptocurrencies.
He said: “At this point our banks don't have material exposures to crypto but you can see over time, there is an investor appetite and not just retail, also institutional investor appetite to have a little bit of this stuff.”
He added: “We would take a very conservative view on capital treatment, and if necessary, we would therefore front run putting some capital measures in place.”
Banking opposition
Banking industry trade bodies have opposed the Basel Committee's plans, saying that extra capital measures were unnecessary.
The Global Financial Markets Association, whose members include large institutions such as JPMorgan and Deutsche Bank, said in a letter to the Committee on Monday that the proposals were “so overly conservative and simplistic that they, in effect, would preclude bank involvement in crypto asset markets”.
The Basel Committee's proposals were first set out in June. Banking industry and other stakeholders were invited to comment by 10 September. The Committee has yet to announce any timing on when the rules could come into effect following the consultation process.
Read more: BoE holds fast but warns on persistent price pressures
Related topics