APRA is setting out “initial risk management expectations” for all regulated entities that engage in activities associated with crypto-assets, and a policy roadmap for the period ahead, Wayne Byres, the APRA chair, said in a letter to regulated entities yesterday.
Regulated entities should engage with their responsible supervisor if they are undertaking activities associated with crypto-assets.
APRA plans to consult on requirements for the prudential treatment of crypto-asset exposures in Australia for ADIs, following the conclusion of the Basel Committee’s current consultation. The consultation in Australia is expected to take place next year, and APRA will consider the need for initial prudential guidance in the interim, Byres said.
“While [crypto] activities can provide opportunities and benefits for the financial system and its customers, they also bring new risks that may be challenging for entities to identify, assess and manage,” he said.
“As the Basel Committee on Banking Supervision has noted, certain crypto-assets have exhibited a high degree of volatility and could present material risks as exposures increase.
“The risks are wide-ranging, covering, for example, operational, investment, and credit risk. The operational risks are particularly important, and encompass fraud, cyber, conduct, AML/CTF and technology risks,” Byres said.
“APRA therefore expects that all regulated entities will adopt a prudent approach if they are undertaking activities associated with crypto-assets, and ensure that any risks are well understood and well managed before launching material new initiatives.”