Indian FinTech Firms Call Basel Committee Crypto Rules Transparency-Driven and Progressive

The Basel Committee on Banking Supervision (BCBS) released a new “disclosure framework” that directs banks to reflect their cryptocurrency exposure in public records earlier this month. In a conversation with Gadgets360, Indian fintech firms said that the BCBS’s decision to pass this law is progressive and geared towards bringing more transparency to the relationship between cryptocurrencies and banks internationally.

Indian Fintech Firms React to Basel Committee Disclosure Framework

In a conversation with Gadgets360, NeoFinity founder and CEO Rayan Malhotra said that while it may be difficult to implement, the Basel Committee’s decision promises to bring about positive change internationally. financial technology sector. NeoFinity is the fintech unit of Neo Group and provides asset management and financial advisory services to institutions.

“Banks are ready to embark on a new era of transparency and accountability. They are now expected to openly disclose their trading in cryptocurrency assets. The new Basel Committee cryptocurrency disclosure framework “It marks a significant step towards greater transparency and regulatory clarity in the cryptocurrency space,” Malhotra noted.

According to Malhotra, the BCBS cryptocurrency disclosure framework will ensure that financial institutions can integrate cryptocurrencies more safely and responsibly into their operations. In a broader sense, this could help the cryptocurrency industry see a safer environment for widespread adoption across the 45 BCBS member countries, including India, Australia, China, the EU, Germany, Italy, and Japan.

Adding to Malhotra’s outlook, A2Z Crypto co-founder and CEO Krishnendu Chatterjee said that BCBS’ crypto disclosure framework for banks will also level the playing field for investors engaging with crypto ETFs. At a broader level, Chatterjee expects this development to usher in more institutional exposure to cryptocurrencies.

“Due to the nature of cryptocurrencies, complete transparency in holding and proper disclosure will lend confidence to any structured product like ETFs or yield tokens that banks may offer to clients. This could be easily achieved by disclosing the wallet addresses where tokens/coins are held,” Chatterjee noted.

Since these assets are based on blockchain, they already offer transparency and instant payments, which other Tradfi assets can hardly offer, added the CEO of A2Z Crypto.

Why the Cryptocurrency Industry Needs Banking Regulation

The cryptocurrency sector hit an all-time high of over $3 trillion in 2021. A year later, promising cryptocurrency projects like Terra and FTX have collapsed, wiping out a valued $2 trillion. Amid the ensuing financial crisis, numerous crypto-related banks in the United States such as Silver door even turned off.

These cases raised concerns among global banking authorities about the risks that volatile cryptocurrencies could pose to their financial systems and stability. Soon after, the World Bank, the International Monetary Fund, and the Financial Stability Board began prioritizing work on drafting rules to govern the cryptocurrency sector, to safeguard crypto investors from similar losses.

Last year, financial regulators around the world joined together India in working to draft cryptographic rules that could function uniformly across international venues. As part of the efforts, a roadmap for cryptocurrency adoptionwhich outlines general rules such as collecting KYC details and reporting suspicious activity related to cryptocurrencies, was created last year.

Other parts of the world are also exploring ways to integrate cryptocurrencies with banking, but under strict security guidelines. Earlier this month, the European Banking Authority (EBA) imposed the ‘travel rule’ on cryptocurrency firms, under which all cryptocurrency firms in the EU were obliged to keep records of every crypto transaction processed through their platforms.

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