APRA has asked banks to provide daily updates on cryptocurrency transactions following the collapse of Silicon Valley Bank.
The Australian Prudential Regulation Authority (APRA) has purportedly urged local banks to report on cryptocurrency transactions in response to the ongoing contagion of the collapse of Silicon Valley Bank (SVB). APRA has reportedly requested banks to enhance their reporting on crypto assets and provide daily updates to the regulatory body.
As per reports, the APRA has directed banks to disclose their exposures to crypto-related start-ups and companies, in a bid to obtain more information and insights into banking exposures to crypto as well as the associated risks. The move is part of APRA’s increased supervision of the banking sector in the aftermath of recent massive collapses in the global banking system.
Recently, UBS Group’s announcement to buy Credit Suisse for $3.2 billion after the latter’s collapse over the weekend became one of the latest failures in the banking industry following the collapses of SVB and Silvergate. Amid these circumstances, the APRA has urged banks to increase their monitoring and management of risks associated with cryptocurrency assets.
Barrenjoey analyst Jonathan Mott reportedly stated that the situation “remains stable” for Australian banks. But, he warned that bank “confidence” could quickly go down, putting pressure on bank margins. He added that credit spreads and cost of capital would continue to rise, leading to margin pressure for banks.
The request from APRA has created concerns among some experts, who believe that such requests could increase the regulatory burden on banks, resulting in higher compliance costs. However, the APRA has emphasized that its request for daily updates is part of its ongoing efforts to ensure that the banking sector remains stable and resilient.
Australian banks should have near zero crypto exposure. We only went through a Royal commission into banking in 2017. They’d be brave to be again tied up in something like this. Time will tell though.
— Rolipony 🇦🇺 (@rolipony) March 21, 2023
Rising Inflation and Banking Crisis
The news of APRA’s request for daily updates on crypto transactions comes after the Australian Banking Association launched an inquiry to examine the impact of the COVID-19 pandemic and geopolitical tensions on the cost of living for Australians. The inquiry followed an analysis of rising inflation, which indicated that more than 186 banks in the United States are at risk of a similar shutdown if depositors decide to withdraw all funds.
In response to APRA’s request, banks in Australia have been quick to improve their reporting on cryptocurrency assets. APRA has also reiterated the importance of monitoring and managing risks associated with crypto assets, stating that it will work closely with banks to ensure that they are able to meet the reporting requirements.
The APRA’s increased supervision of the banking sector has raised concerns among some experts that it could lead to an increase in compliance costs for banks. However, APRA purports that its actions aim to ensure the stability and resilience of the banking sector in Australia.
In conclusion, the APRA has asked local banks to improve their reporting on cryptocurrency transactions and provide daily updates. The move is part of the regulator’s increased supervision of the banking sector following recent massive collapses in the global banking system. While some experts have raised concerns about the regulatory burden, APRA has emphasized the importance of monitoring and managing risks associated with crypto assets to ensure that the banking sector remains stable and resilient.
