How Indian Fintech Companies Responded to Basel Committee’s Crypto Rules
The Basel Committee on Banking Supervision (BCBS) earlier this month released a new disclosure framework that mandates banks to disclose their exposure to crypto assets as public data. Speaking to Gadgets360, Indian fintech companies said the Basel Committee’s decision to pass this law is progressive and aimed at bringing more transparency to the relationship between cryptocurrencies and banks internationally.
Indian Fintech Companies React to Basel Committee Disclosure Framework
Speaking to Gadgets360, NeoFinity Founder and CEO Rayan Malhotra said that while it may be challenging to implement, the Basel Committee’s decision promises to bring about a positive shift in the international fintech industry. NeoFinity is the fintech unit of the Neo Group and offers asset management services and financial advisory to institutions.
“Banks are on the cusp of a new era of transparency and accountability, as they are now expected to openly disclose their trading in cryptocurrency assets. The Basel Committee’s new crypto disclosure framework marks an important step towards greater transparency and regulatory clarity in the crypto industry,” Malhotra noted.
According to Malhotra, the Basel Committee’s crypto asset disclosure framework will ensure that financial institutions can integrate crypto assets into their operations more securely and responsibly. In the broader picture, this could help the crypto industry see a safer scope for broad adoption across all 45 BCBS member states, including India, Australia, China, the EU, Germany, Italy, and Japan.
Adding to Malhotra’s outlook, A2Z Crypto co-founder and CEO Krishnendu Chatterjee said that BCBS’ crypto disclosure framework for banks will also level the playing field for investors dabbling in crypto ETFs. Overall, Chatterjee predicts that this development will lead to more institutional exposure to cryptocurrency.
“Due to the nature of crypto assets, complete transparency in holding and proper disclosure will lend confidence to any structured products like ETFs or yield bearing tokens that banks may offer to customers. It could be easily achieved by disclosing wallet addresses, in which tokens/coins are held,” Chatterjee noted.
Since these assets are blockchain-based, they already offer transparency and instant settlements, which hardly any other Tradfi assets can offer, the A2Z Crypto CEO added.
Why the Crypto Industry Needs Banking Regulation
The crypto sector reached a record high of over $3 trillion in 2021. A year later, promising crypto projects like Terra and FTX collapsed, causing a estimated $2 trillion. Amid the ensuing financial turmoil, several crypto-related banks in the US also closed, such as Silvergate.
These cases raised concerns among global banking authorities about the risks that volatile crypto assets could pose to their respective financial systems and stability. Shortly after, the World Bank, the International Monetary Fund, and the Financial Stability Board began prioritizing the creation of regulations to govern the crypto sector and protect crypto investors from similar losses.
Last year, financial regulators from around the world joined forces with India to create crypto regulations that could work uniformly across international locations. As part of the effort, a crypto adoption roadmap was created last year, outlining common rules such as collecting KYC data and reporting suspicious crypto activity.
Other parts of the world are also exploring ways to integrate crypto with banking, but under strict security-related guidelines. Earlier this month, the European Banking Authority (EBA) imposed the “travel rule” on crypto firms, requiring all crypto firms in the EU to keep records of every crypto transaction processed through their platforms.
