Although the Bitcoin Risk is Insignificant for Singapore Banks, The Risk Level is High

Although the Bitcoin Risk is Insignificant for Singapore Banks, The Risk Level is High
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Although the Bitcoin risk is insignificant for Singapore Banks, the risk level is high. Banks will hold $125 in capital for every $100 worth of bitcoins, a minister said.

Singapore banks are required to hold $125 in capital versus $100 for exposure to risky cryptocurrencies such as bitcoin or ether, a government official said on Monday. Although banks in the jurisdiction have an “insignificant” level of crypto exposure – providing less than 0.05% of the total risk exposure – these types of crypto assets are under regulatory control of the strongest risk set by international standard setters, said the senior. minister and minister. Singapore’s Financial Conduct Authority Tharman Shanmugaratnam in a written response to a question asked during a parliamentary session.

“Pending the end of the process, MAS requires banks incorporated in Singapore to apply a 1250% risk for exposure to crypto-assets risk such as Bitcoin and Ether,” he said. “…Based on MAS’ minimum total capital adequacy requirement of 10% for systemically important banks incorporated in Singapore, this means that banks incorporated in Singapore need to hold $125 of capital against a $100 exposure to a crypto -assets like Bitcoin.”

Singapore Banks

Singapore’s lawmakers are facing tough questions on crypto during the current parliamentary session, which began on Monday. Most of the questions are related to the failure of Sam Bankman-Fried’s FTX crypto exchange, and some are investigating the financial state of Temasek and the failed company.

Since the fall, the country’s financial regulator, MAS, has had to answer questions about how it determines which investors can safely use crypto exchanges. In August, MAS said it was working with other regulators to develop a prudent system for banks’ exposure to crypto. Shanmugaratnam said on Monday that Singapore is complying with the requirements of international standards bodies, recommended by the Basel Committee on Banking Supervision (BCBS). BCBS is set to finalize key requirements for cryptocurrencies such as bitcoin and ether by the end of the year.

Until this process is completed, MAS has “the greatest risk exposure to BCBS capital”, according to Shanmugaratnam. “For low-risk crypto-assets, such as tokenized corporate bonds that meet a set of conditions to ensure that they present the same level of financial risk as traditional corporate bonds, and The treatment mind is similar to that applied to traditional non-tokenized assets. , “Shanmugaratnam says.

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