APRA Sets Out Risk Management and Policy Roadmap for Crypto-Assets
The Australian Prudential Regulation Authority (APRA) published a letter that sets out initial risk management expectations for all regulated entities that engage in activities associated with crypto-assets, along with the related policy roadmap for the period ahead.
APRA expects all regulated entities to adopt a prudent approach while undertaking activities associated with crypto-assets and ensure that any risks are well-understood and well-managed before launching material new initiatives. The key expectations from all regulated entities are to:
- Conduct appropriate due diligence and comprehensive risk assessment before engaging in activities associated with crypto-assets and ensure to have actions in place to mitigate any associated risks including credit risk, investment risk, operational risk, cyber risk, anti-money laundering/combating the financing of terrorism (AML/CFT) and technology risks.
- Consider the principles and requirements of Prudential Standard CPS 231 Outsourcing or Prudential Standard SPS 231 Outsourcing when relying on a third party in conducting activities involving crypto-assets.
- Apply robust risk management controls, with clear accountabilities and relevant reporting to the Board on the key risks associated with new ventures.
- Consider potential prudential risks formulated by APRA while undertaking crypto-asset activities.
- Comply with all conduct and disclosure regulation administered by Australian Securities and Investments Commission (ASIC), including risk management, consideration of distribution practices, disclosure, and product design.
- Consult with APRA and ASIC on prudential, disclosure, or conduct requirements and expectations when undertaking activities associated with crypto-assets.
Policy Roadmap—In addition, APRA plans to develop long-term prudential framework for crypto-assets and related activities in consultation with other international regulators, to ensure consistency in approach. In the period ahead, APRA plans to:
- Consult on requirements for the prudential treatment of crypto-asset exposures in Australia for authorized deposit-taking institutions, following the conclusion of the Basel Committee’s current consultation. The consultation is expected to be undertaken in 2023.
- Progress new and revised requirements for operational risk management, covering control effectiveness, business continuity, and service provider management. The draft prudential standard will be released for consultation by mid-2022.
- Develop regulatory framework for Stored-value Facilities (SVFs) and consult on prudential requirements for large SVFs by 2023.
Related Links
Keywords: Asia Pacific, Australia, Banking, Crypto-Assets, Operational Risk, Credit Risk, Cyber Risk, AML CFT, CPS 231, SPS 231, Disclosures, Business Continuity, ASIC, Stablecoins, Outsourcing Arrangements, APRA
Previous Article
HKMA Amends Regulatory Capital Rules for BanksRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
