MAS Says Singapore Banks’ Exposures to Cryptoassets Are Insignificant

MAS Says Singapore Banks’ Exposures to Cryptoassets Are Insignificant

by November 29, 2022

Singapore’s Senior Minister and Minister in charge of the Monetary Authority of Singapore (MAS) Tharman Shanmugaratnam said that banks in the country are required to hold S$125 of capital against an exposure of S$100 to a cryptoasset like Bitcoin.

In a written response to a parliamentary question, Tharman added that Singapore-incorporated banks’ exposures to cryptoassets are insignificant, contributing less than 0.05% of their total risk weighted assets.

The Basel Committee on Banking Supervision (BCBS) is working to finalise a framework for the prudential treatment of banks’ exposures to cryptoassets.

Tharman revealed that MAS is contributing actively to this work, which seeks to ensure that banks maintain adequate capital and liquidity for such exposures.

The BCBS has issued two rounds of consultation thus far and will finalise the framework around the end of 2022.

Pending the finalisation of the framework, the regulator requires Singapore-incorporated banks to apply a 1250% risk weight for exposures to riskier cryptoassets such as Bitcoin and Ether.

This is the highest risk weight under the BCBS’ capital framework.

Tharman Shanmugaratnam

Tharman Shanmugaratnam

Tharman said,

“For less risky cryptoassets, such as tokenised corporate bonds that meet a set of conditions to ensure that they pose the same level of financial risks as traditional corporate bonds, the prudential treatment is similar to that applied to the traditional non-tokenised asset.”