Australian regulators require Banks to report their Crypto exposure
Press Release

Australian regulators require Banks to report their Crypto exposure

written by John Murphy | March 23, 2023

The collapse of the famous crypto-friendly banks has left the trader’s market in a frenzy. In light of that issue, the Australian Prudential Regulatory Authority (APRA) requires banks to report their crypto-related business exposure.

Key Takeaways

  • Australian Regulators have requested the banks to report any crypto-related exposure
  • The Treasurer thinks the Australian Banking system can withstand anything
  • The collapse of Major crypto-friendly banks has led to this decision

APRA has recently instructed all of the banks to report their involvement in cryptocurrency transactions. Also report their exposure to startups and businesses related to the crypto industry. This move came specifically after the Silicon Valley Bank SVB crisis. As the US bank was later found to be heavily involved in lending to tech startups and fintech firms.

The purpose behind Apra’s request was to ensure safety. They wanted to make sure that the Australian banks are not overexposed to crypto and its volatile startup industry. In addition, requiring the banks for daily updates on their exposure will allow the regulatory authorities to better monitor the activities and potential risks.

However last week Treasurer Jim Chalmers, reassured the public that Australia’s banking system is strong enough to withstand anything. Be it any market volatility. He also added that the country banks were well-capitalized and well-regulated with strong liquidity. Other than that they also have sufficient funds to absorb any potential losses.

Could the U.S. financial crisis leave the entire global banking system at risk?

ApRA had to step up its supervision strategy because of the collapse of major crypto-friendly U.S. banks. First, it was the Silicon Valley bank that went down then the Signature bank, and then Silvergate Capital Corp.

While that was not enough recently Credit Suisse Group is also in crisis. Though UBS Group AG was planning on acquiring the bank.

According to Barrenjoey analyst Jonathan Mott, Australian banks are currently stable, and risks involved in losing confidence which could lead to pressure on their profit margins. Moreover, the rising capital costs may deteriorate credit quality.

The Australian banking association opened an inquiry to asses COVID-19 effects and geopolitical tensions on the costs of living. After that, this announcement came out.