Banks to disclose cryptocurrency exposure: explaining the impact of investments

Global banking regulators have approved a framework that requires banks to disclose their cryptocurrency exposures. The move comes at a time when the crypto asset industry has been grappling with some turbulence, with both sharp increases and dramatic declines.

Global Banking Regulators Set New Standards for Cryptocurrency Transparency

Basel Committee’s 2026 deadline for cryptocurrency exposure disclosure

The Basel Committee on Banking Supervision has set a deadline of January 2026. By then, banks must disclose their exposure to cryptocurrencies, “or else.”

This setup provides transparency and can also improve market discipline. The process will take some time, but it can optimize the way crypto assets are managed, bought, and sold.

Read also: Bank of Montreal Discloses Bitcoin ETF Holdings in SEC Filings

The Development of Cryptocurrency Regulations Around the World

With the recent volatility of the cryptocurrency market, it has become obvious that there is a need for more stringent regulatory policies.

Moreover, PwC’s Global Crypto Regulation Report 2023 also confirms the need for regulation, stating:

“Over the past year, the crypto asset industry has seen spectacular gains – overshadowed by lower declines, including crypto firm failures, fraud, scams, and mismanagement of client funds. While this is not the fault of the underlying crypto assets or blockchain technology, it once again underscores the need for robust regulatory and oversight policies established at a global level.”

As a result, global banking regulators are responding to this need by:

• European Union finalizes crypto-asset market regulations
• Dubai creates world’s first virtual asset institution
• UK plans to regulate cryptocurrencies as financial instruments

Read also: JPMorgan Chase Unveils Bitcoin ETF Spot Portfolio

Impact on banks and crypto companies

The new requirement for banks to disclose their cryptocurrency exposure will impact nearly every industry on the planet. Still, the world’s traditional institutions will benefit from this change, having clear goals that allow them to enter the market with confidence.

Furthermore, crypto-native companies may need to develop their regulatory knowledge and compliance skills. While this process would require a lot of time and effort, the results should be worth it.

As mentioned in the PwC report:

“For traditional financial institutions, digital asset regulation provides long-needed clarity and certainty to enter the space and begin building digital asset offerings. For crypto-native firms, regulatory clarity could mean the need to rapidly expand their regulatory expertise and compliance oversight, in line with global financial services regulatory requirements.”

Read also: Wells Fargo Unveils Spot Bitcoin ETF Holdings

Consequences for investors

As global banking regulators implement this change, it will also affect investors. This could present some challenges, but also great opportunities.

The good news is that this change in regulation will provide more transparency, which in turn will allow for more informed financial decisions. At the same time, it could also lead to changes in the way banks engage with crypto assets.

Depending on how these changes unfold, they could potentially impact related investment products and services, but that remains to be seen.

If we could give investors any advice it would be this:

• Investors should be kept up to date on how their banks will disclose their cryptocurrency exposure
• Diversify your investments across asset classes to reduce risk
• Consult with experienced financial advisors who are familiar with the traditional banking and cryptocurrency markets to better understand the implications of the new regulations

In summary, requiring banks to disclose their level of exposure to cryptocurrencies is an important step that will ultimately lead to the inclusion of digital assets in the regulated financial system.

What do you think these new regulations will bring? One thing is for sure: we will find out by 2026.