Featured Product

    BoM Proposes Guideline for Virtual Asset Related Activities of Banks

    November 30, 2022

    The Bank of Mauritius (BoM) proposed guideline that sets out the framework for a sound and prudent approach by banks when dealing with virtual-asset-related activities, with the feedback period for the consultation ending on December 30, 2022.

    This guideline, which is based on the principles set out in the second consultative document of the Basel Committee on Banking Supervision on the prudential treatment of crypto-asset exposures, applies to all banks licensed under the Banking Act 2004 and engaged in virtual asset-related activities. The guideline sets out the principles to be followed by banks involved in activities related to virtual assets, covers the prudential classification and the prudential treatment of virtual assets, and states that: 

    • Prior to engaging in any virtual asset-related activity, banks shall ensure that the strategy, risk appetite, risk limits, and risk management framework, including relevant policies, are duly approved by the board. Also, banks shall satisfy themselves that the virtual-asset-related activities are duly licensed and regulated.
    • Banks may be exposed to credit risk; therefore, banks shall ensure that the credit risk assessment takes into consideration the risks associated with virtual assets and that there are appropriate systems in place to monitor the value of virtual assets provided as collateral. Banks shall ensure that the virtual assets recognized as collateral can be liquidated promptly.
    • Banks shall assess the potential impact of exposures to virtual assets on the liquidity position of banks and factor such exposures into their internal liquidity adequacy assessment processes.
    • Banks shall ensure that internal operational risk and cyber and technology risk management frameworks duly cover the risks associated with activities related to virtual asset.
    • Banks shall identify, assess, and understand the money laundering, terrorism financing, and proliferation financing risks that may arise from virtual asset related activities and take appropriate measures to manage and mitigate these risks. 
    • The risk-weighted assets for Group 1a Virtual Assets (tokenized traditional assets) in the banking book shall be determined as set out in the Guideline on Standardized Approach to Credit Risk for the relevant non-tokenized traditional assets.
    • The minimum capital requirements for credit risk for Group 1b Virtual Assets (virtual assets with an effective stabilization mechanism) in the banking book shall be determined by the Bank on a case-by-case basis and shall be at least equal to the value of exposure amount.
    • Group 1 Virtual Assets that are tokenized versions of High-Quality Liquid Assets (HQLA) may be considered as HQLA provided that the equivalent traditional asset and their tokenized version both satisfy the characteristics and eligibility criteria of HQLA set out in the Guideline on Liquidity Risk Management.
    • Banks shall submit a quarterly report on virtual-asset-related activities and shall disclose, at least on an annual basis, in their annual reports, their material virtual-asset-related activities, including their direct and indirect exposure amounts for each of these activities.

    In Mauritius, the Virtual Asset and Initial Token Offering Services Act 2021 (The VAITOS Act), which came into force on February 07, 2022, provides for a regulatory framework for new and developing activities regarding Virtual Assets and Initial Token Offerings. The VAITOS Act empowers the Financial Services Commission, Mauritius (the FSC) to regulate and supervise Virtual Asset Service Providers and issuers of Initial Token Offerings. Banks may also be engaged in activities related to virtual assets and provide banking services to Virtual Asset Service Providers, issuers of Initial Token Offerings, and customers dealing in virtual assets. Thus, BoM has come up with this draft Guideline for Virtual Asset related Activities. 


    Related Links


    Keywords: Middle East and Africa, Mauritius, Banking, Basel, Guidance, DLT, Distributed Ledger Technology, Crypto-Assets, Regtech, Credit Risk, Liquidity Risk, BoM

    Featured Experts
    Related Articles

    FINMA Approves Merger of Credit Suisse and UBS

    The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.

    March 21, 2023 WebPage Regulatory News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.

    March 07, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    MFSA Sets Out Supervisory Priorities, Issues Reporting Updates

    The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023

    March 02, 2023 WebPage Regulatory News

    German Regulators Issue Multiple Reporting Updates for Banks

    Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8806