Australia Wants Banks to Declare their Exposure to Crypto

The Australian Financial Review reported on March 21 that the Australian Prudential Regulatory Authority (APRA) has begun asking banks in Australia to disclose their exposures to start-ups and businesses engaged in the cryptocurrency industry. 

Australia’s prudential regulator is said to have requested local banks to submit reports on cryptocurrency transactions, in light of the current impacts associated with Silicon Valley Bank’s (SVB) collapse.

Australia Demands Banks to Send Daily Updates

According to the report, which cites three persons with knowledge of the situation, the regulator has instructed banks to enhance their reporting on crypto assets and send daily updates to the APRA. In accordance with the individuals, the agency wants to learn more about banking exposures to cryptocurrencies and the hazards involved.

Australian banks’ conditions are said to be “stable,” but Barrenjoey analyst Jonathan Mott reportedly advised clients in a note that confidence might drop down, putting a lot of pressure on bank margins.

Mott said: “Our channel checks indicate deposits are not being withdrawn from smaller institutions in any size, and capital and liquidity buffers are strong” while adding: 

“But this is a crisis of confidence and credit spreads and cost of capital will continue to rise. At a minimum, this will add to the margin pressure the banks are facing, while credit quality will continue to deteriorate.” 

As a result of recent significant breakdowns in the global financial system, the APRA is reportedly increasing its regulation of the banking industry. Significantly, the struggling Credit Suisse fell over the last week, prompting the UBS Group to agree to purchase it for $3.2 billion.

Following the failure of three significant banks, Silicon Valley Bank, Signature Bank, and Silvergate, the takeover turned into one of the most recent failures in the banking sector.

At the end of the last year, Australia announced intentions to establish a framework that will control the operations of service providers for digital assets this year.