Caixin: Singapore Plans to Optimize Capital Regulation for Bank Crypto Assets

On April 22, Caixin reported that the Monetary Authority of Singapore (MAS) has released a consultation paper proposing to establish more favorable regulatory capital guidelines for crypto assets on permissionless blockchains before implementing the Basel capital regulations for crypto assets. The current Basel regulations are considered overly stringent for classifying public chain assets, which may stifle innovation in the banking sector. The Basel capital regulations for crypto assets categorize them into two groups: the first group includes tokenized traditional assets and stablecoins, which are subject to lower capital requirements, while the second group includes crypto assets that do not meet the above criteria. The MAS intends to abandon the practice of categorizing all permissionless blockchain crypto assets as part of the second group, allowing them to be classified as first group crypto assets with lower risk weights and more lenient prudential requirements, provided they meet a series of principled conditions. Specifically, for banks registered in Singapore, the risk exposure of permissionless blockchain crypto assets classified as first group must not exceed 2% of the bank’s Tier 1 capital, and if the issuance creates liabilities at the bank level, the issuance size must not exceed 5% of Tier 1 capital.